With oil prices touching new highs, Petroleum Minister Murli Deora on Wednesday knocked at the doors of Finance Minister P Chidambaram for fiscal measures to compensate state-run firms for selling fuel below the cost.
Public sector firms — Indian Oil, Hindustan Petroleum and Bharat Petroleum — are losing close to Rs 180 crore every day on sale of petrol, diesel, domestic cooking gas (LPG) and PDS kerosene as Government has barred them from raising retail prices in line with rise in cost of international crude oil.

“The situation has become really tough... the Indian basket of crude oil touched $73.89 a barrel on July 16. These losses are not sustainable,” Deora said, but refused to say if petrol and diesel prices would be raised.
Oil firms are losing Rs 5.50 a litre on petrol, Rs 4.45 per litre of diesel, Rs 187 per LPG cylinder and Rs 14.70 per litre on kerosene sale and Deora asked Finance Minister to issue oil bonds worth Rs 19,000 crore to absorb one-third impact of the surge in international oil prices.

Distribution
Under-realisation on fuel sale is anticipated to be around Rs 55,000 crore in 2007-08. One-third of this amount would be met by upstream firms ONGC and OIL by way of discounts of crude oil they sell to IOC, BPCL and HPCL. The remaining amount would have to be absorbed by retailers and passed on to consumers.

Indian basket of crude oil averaged $72.31 per barrel in July, a 14 per cent jump since February when petrol and diesel were cut by Rs 2 a litre and Re one per litre respectively.