Oil cos: Will roll back prices if govt directs
Mumbai   05-Nov-2011

Facing all- round criticism for a steep hike of Rs 1.80 a litre in petrol price, state- owned oil companies said they will roll back the increase in rate if the government gives a directive to that effect.

At a hurriedly called press conference, Indian Oil Corporation ( IOC) Chairman R S Butola said the government had freed petrol prices in June last year and empowered oil companies to decide the retail rates, but given the ownership structure the PSUs we will abide by the government directive to roll back prices.

" We do not plan to affect a roll- back of prices, but if we get a directive ( to rollback prices), we will have to implement that," Butola, who was accompanied by BPCL Chairman R K Singh, said. Explaining the reasons for hike in petrol prices, Butola said the oil marketing companies had lost Rs 2,468 crore on selling the fuel below cost in the first half of the current fiscal. This was on top of Rs 2,500 crore loss they incurred in 2010- 11.

" Given the magnitude of the losses, the choice before us was to either cut down production or pass on the increase to consumers. We chose to raise prices and continue supply lines," he said.

To worsen the situation, the rupee has depreciated from Rs 45 to a US dollar to over Rs 49 per dollar in the recent months. " The under- recoveries ( revenue loss) of oil marketing companies increase by about Rs 8,000 crore annually on account of every Re 1 depreciation," he said. " The combined losses of BPCL and HPCL for the first half are more than Rs. 12,000 crore and IOCL is also likely to be in red, if no further cash assistance is announced," said the petroleum ministry.