Indian Oil Corp may hike petrol prices by Rs 1.35/litre


Country’s biggest fuel retailer Indian Oil Corp on Monday said it may raise petrol price again as it was losing Rs. 1.35 per litre sale of the motor fuel. Oil firms have raised petrol prices immediately after assembly elections were over in mid May, after hiolding back such hikes for almost four months. “We would increase the prices after assessing the market. There has been some decline in the prices of crude but there is still an under-recovery of Rs. 1.35 per litre sale of petrol,” IOC chairman R.S. Butola told reporters at a media conference.

IOC’s gross turnover cross the Rs. 3 trillion mark in 2010-11 but its net profit dipped to Rs. 80.86 billion from close to Rs. 110 billion in previous year. Butola said the company’s under-recovery or loss in revenue due sale of fuels at less than market rate was at Rs. 2.6 billion a day now as compared to Rs. 2.7 billion daily in all of 2010-11 (Apr-Mar). The present under-recovery was Rs. 12.64 for sale of one litre of diesel, Rs. 25.85 for kerosene and Rs. 380.5 on every cylinder of LPG, he said. According to Oil Ministry data, Indian crude oil basket price inched up to $111.04 on Friday from $110.75 a day before but was still lower than $112.32 during May 1-15, as global fuel prices remain volatile.

State-run oil marketing companies – Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum – have little reason to rejoice as under-recovery or revenue loss still remains at Rs. 14.66 per litre sale of diesel, Rs. 28.28 for kerosene and Rs. 329.73 per cylinder of LPG. Oil firms are currently incurring daily under-recovery of Rs. 4.79 billion on the sale of diesel, PDS kerosene and LPG. India is considering raising diesel, kerosene and LPG prices for quite some time and an empowered group of ministers is scheduled to meet on June 9 to decide on the extent of price hikes. High fuel and food prices have kept the headline inflation at over 9.5% all through 2010 before easing to 8.66% in April, which is still above central bank’s comfort level of 5%. Government finances are already strained due to delay in fuel price hikes as subsidy bill is mounting and increasing chances the fiscal deficit may be higher than the targeted 4.6% of gross domestic product targeted for 2011-12.