The Centre has no plans to raise fuel prices in the immediate future and will take a decision in this regard at an “appropriate time”, Petroleum Minister Murli Deora said on Tuesday. “A decision on fuel price will be taken at an appropriate time,” Deora said at the Economic Editors’ Conference here.
“Price hike is not needed at this time,” he said when asked to comment on the possibility of raising prices of petroleum products in view of the spiralling prices of crude oil in the international market. Deora, however, expressed concern about under-recoveries of state-run oil companies on account of increasing global crude prices which are close to $100 per barrel.
Deora said to insulate the economy against volatility in global oil prices, “we are consulting colleagues in other ministries, including Finance Ministry, for an early workable solution”.
As part of the strategy to cope with the rising global crude oil price, the Petroleum Ministry is understood to have floated the proposal to either marginally raise petrol and diesel prices or cut duties on petroleum products.
With election to the Gujarat Assembly round the corner, the top leadership of the Congress, which is leading the ruling UPA coalition at the Centre, does not want to take any political risk by raising the fuel prices.
Key coalition partners of the Congress in the ruling UPA are also not in favour of effecting any hike in fuel prices in view of the forthcoming elections.
The minister also said rupee appreciation has partly neutralised the impact of rising prices in the global market. The Indian currency has risen more than 12 per cent against the US dollar in 2007, making imports cheaper. Under-recoveries of state-run oil companies are likely to be around Rs 68,648 crore in the current fiscal.
The three state-owned OMCs—IOC, BPCL and HPCL— are currently losing over Rs 240 crore per day on sale of petrol, diesel, domestic LPG and PDS kerosene.
The OMCs are making a loss of Rs 4.94 on sale of every litre of petrol, Rs 6.50 per litre on diesel, Rs 16.42 a litre on kerosene and Rs 207 per cylinder on LPG.
Deora said it has been decided to issue oil bonds up to Rs 23,457 crore to compensate oil companies on selling fuel below cost. Upstream oil companies such as ONGC and GAIL would have to absorb one-third of the under-recoveries.