Oil firms seek dual pricing

Proposed measures to decrease burden of oil price hike, says IOC chief.

Oil companies have proposed a dual pricing system for petroleum products in the wake of a sharp rise in international crude oil prices.

Speaking at the "Indian oil and gas review" symposium held in Mumbai today, Sarthak Behuria, chairman of Indian Oil Corporation, said, "We are in talks with the government," indicating that the dual pricing policy would allow selling fuel to two-wheelers at lower prices and to four-wheelers at the import parity price. This, he said, would minimise the unprecedented losses faced by the oil marketing companies.

Further, he suggested a differential pricing system for petroleum products in cities and towns against rural areas.

He said the government should look at rationalising the ad valorem duty on crude oil imports in the short-term, and eventually look at alternates like ethanol-blended fuel.

He cited China's example. China has rationed fuel and has announced three price hikes this year. It is now thinking of imposing a fuel tax. Behuria also referred to Thailand, which had abolished all fuel subsidies. India, too, could adopt similar measures, he said.

"Oil companies have been urging the government to increase the price of retail fuel," Behuria said.

India depends on imports to service over 70 per cent of its oil requirement. While the price of crude oil has skyrocketted by about 65 per cent, fuel prices here have been hiked by only 7 per cent.

IOC has already lost Rs 1,800 crore, Bharat Petroleum Rs 1,300 crore and Hindustan Petroleum Rs 1,050 crore due to the non-revision of fuel prices.

IOC speak

Dual pricing policy will allow selling fuel to two-wheelers at lower prices and to four-wheelers at the import parity price

A differential pricing system for petroleum products in cities and towns against rural areas

The government should look at rationalising the ad valorem duty on crude oil imports in the short-term, and eventually look at alternates like ethanol-blended fuel