IndianOil needs Rs 9 a litre hike in petrol prices to offset losses
New Delhi   06-Jan-2008
IndianOil will need a petrol price hike of Rs 8-9 per litre to partly offset the under-recovery of Rs 120 crore per day caused by the gap between the controlled retail prices and the high international prices of crude petroleum. IndianOil Chairman Sarthak Behuria, when asked about the ideal price for retail petrol to offset the under-recovery said, "Rs 8-9 is the under-recovery in petrol, so that can be the ideal increase." "But the maximum under-recovery is in kerosene, diesel and LPG," he added, who was here for an event organised by the Indian Institute of Management (IIM), Calcutta. Behuria said LPG is being sold at a loss of Rs 260(per cylinder), kerosene at a loss of Rs 21-22 and diesel at Rs 9-10 per litre. "But it would not be possible to increase the price of every product by these levels to off set under - recovery,” he said. He said the group of ministers (GoM) meeting later this month would also look at other options besides a price hike to reduce the losses of the oil companies. Official data show that the Union and state governments between them mark-up prices by over Rs 16 per litre for petrol and Rs 11 per litre for diesel, leading to the high retail prices. In West Bengal, petrol at the refinery gate is Rs 20.39 per litre while motorists pay Rs 46.86 at the pump. The government adds Rs 14.70 per litre by way of excise, additional excise and education cess. The CPI (M)-led Left Front government, while opposing retail-price increases, adds Rs 9.97per litre by way of a 25% sales tax and Rs 1 cess. Behuria said IndianOil did not plan to revise its apex plan despite the losses it is incurring. The company plans to invest Rs 43,250 crore over the next 5 years, of which Rs 30,000 crore will be on down- stream integration in petro chemicals and the rest for upstream activity. He said IndianOil will bid aggressively in the New Exploration Licensing Policy (NELP)—VII and is ready to tie-up with foreign partners. "We will actually be able to find out foreign partners in the NELP road show starting from January 8, in Mumbai. The road show will also be held in Calgary, Boston, Perth and London; and we will have the real discussions there," he said. IndianOil is already in talks with GAIL, OIL, RIL and a couple of foreign companies to jointly participate in NELP—VII.