Still losing Rs 1.22 a litre on petrol: IOC
New Delhi   18-Jan-2011

Consumers, who have put up with a 22% increase in petrol price so far this fiscal, could be in store for further price increase unless the global crude price softens or the government steps in with tax cuts. Indian Oil Corporation said on Monday that even after a Rs 2.5 a litre or 4.47% price increase that made petrol cost Rs 58.37 a litre in the national capital from Sunday, it is still suffering a loss of Rs 1.22 a litre. The government is now looking at the possibility of tax cuts on petroleum products so that in the event of a further price increase by retailers, consumers would be spared of the pain.

Oil price softened on Monday to near $91 a barrel in Asia as the dollar gained against the euro and after China moved to restrict lending that raised the prospect of weaker demand for crude. The Indian basket of crude had touched $95 last week.

IOC said it is now incurring a loss of Rs 159 crore a day on the sales of diesel, kerosene and domestic LPG. IOC increased the retail price by a limited extent although global crude price warranted a higher price increase in the local market, the company stated here.

As per the current global crude price, the desired increase in petrol’s retail price in the capital was Rs 3.72 a litre, but IOC restricted the actual price increase and did not pass on the balance required increase of Rs 1.22 a litre, the company said here, quoting chairman BM Bansal.

In the meantime, oil major ONGC said it was concerned over Brent crude touching a high of $98. RS Sharma, CMD, ONGC, said while crude oil producers must have reasons to rejoice, ONGC’s retention price goes on reducing with increasing oil prices owing to fuel subsidy sharing.

“I don’t think there is going to be immediate respite and the outlook is not comforting,” Sharma said. Consumers, service providers and the industry want stability in price so that fluctuating crude prices do not play spoilsport in energy planning, he said.

IOC’s gross under-realisation for the year 2010-11 is estimated at Rs.40,600 crore, while all public sector enterprises together, would incur a loss of Rs 73,600 crore.