Oil firms justify hike, say profit marginal
New Delhi   05-Nov-2011

State-run oil companies on Friday conceded having made profit on petrol in the last few days but said it was “marginal” and not enough to avoid a price increase since overall losses on the fuel remained high owing to the rupee’s depreciation.

“I admit there may have been some over-recovery for afew days. But the oil marketing companies base their price on fortnightly average that showed our losses had gone up to Rs 1.52 paise on a litre of petrol since November 1,” R S Butola, chairman of India’s largest fuel retailer IndianOil, told reporters with Bharat Petroleum chairman R K Singh by his side.

TOI had on Friday highlighted that the companies raised petrol price even as they saw a profit of 25 paise a litre since October 28 because of softening of global crude and petrol prices. Data from Singapore and Arab-Gulf product markets, which serve as markers for Indian pump prices, showed a declining trend both in petrol’s price and demand in the same period. Butola did not dispute this , but said a drop in crude for a day or two did not make much of an impact as prices could jump back “as they did on Wednesday by $4 a barrel”.

The oil company chiefs appeared to be speaking on cue from the parent oil ministry which is under pressure from allies as well as the Congress itself to explain the move ahead of winter session of Parliament and crucial state polls. “It is entirely misleading to calculate profit of oil companies basing on the quotes of international crude and product prices of a few days,” the ministry said in a note. It also pointed out that the companies were expected to lose Rs 132,000 crore during the current financial year, or 26% of India’s oil import bill.

Indeed, Butola had told TOI on Thursday that this moderation had lessened the impact of the rupee’s fall against the dollar by 97 paise, without which petrol price would have had to be raised by Rs 2.49 a litre.