Petrol price hike needed: IOC
New Delhi   07-Sep-2011

State-run IndianOil (IOC) said petrol prices need to be raised as revenue losses from selling the fuel at government controlled rates have widened more than sevenfold in September, the head of finance, Mr P.K. Goyal, said on Tuesday.

Revenue losses on petrol sales now stand at Rs 3 compared to about Rs 0.41 a litre in the fortnight ending August 31 due to an increase in Singapore spot prices of the fuel, he said.

"There is scope to raise petrol prices," Mr Goyal said. "In the last fortnight (ending August 31), our revenue loss was Rs 0.41 a litre." The increase of Rs 5 a litre made the fuel costlier than in the world's biggest oil consumer United States, hurting local consumption. Slowing car sales in Asia's third-biggest economy has also curbed sales.

The government in 2010 gave state-run firms permission to fix petrol prices on their own, while retaining control over diesel, kerosene and cooking gas to protect the poor and tame stubbornly high inflation. Still, these companies need a nod from the government to increase gasoline prices.

State-run retailers get cash subsidy from the government and discount on crude and products pur chased from state-run upstream firms to partly offset the losses.

IOC is the nation's biggest refiner controlling about a third of the 4.17 million barrels per day capacity. It is building a 300,000 bpd refinery in Paradip in Odisha. The company aims to spend Rs 12,000 to Rs 13,000 crore next fiscal year on new projects. Pardip would start by June 2013 and will operate at full capacity in 2014, he said.