The state-owned oil companies have demanded a hike in the prices of petrol and diesel by Rs 2.90 per litre and Rs 4.68 a litre in line with the rise in the cost of crude oil, Petroleum Minister Murli Deora told the Lok Sabha.

“The public sector oil marketing companies (Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited) have sought increase in the prices of petroleum products, namely petrol, diesel, PDS kerosene and domestic LPG,” he said in a written reply.

The average price of Indian basket of crude oil during 2007-08 (up to August) has increased to $68.34 per barrel as compared to $62.46 a barrel during 2006-07.

The oil companies, he said, have sought an increase of Rs 2.90 per litre in petrol prices, Rs 4.68 a litre in diesel, Rs 15.47 per litre in PDS kerosene and Rs 174.75 per cylinder in domestic LPG.

The burden of increase in international oil prices would be shared equitably amongst three stakeholders — government, state-run oil companies and the consumers — “to protect the interest of common man and vulnerable sections of the society”, he said.

Government would issue oil bonds to oil companies to compensate them for one-third of their losses on fuel sale, while upstream firms like ONGC would sell crude oil at a discount to cover for an equivalent revenue loss.
“The government is closely monitoring the international oil prices and will continue to protect the interests of consumers,” he said. 

Sharing loss
As part of the exercise to reduce the burden on consumers in the face of rising global crude oil prices, Finance Minister P Chidambaram had agreed in principle to share one third of revenue loss being incurred by the state-owned oil marketing firms by selling petroleum products below cost prices.

At a meeting held last week with the Petroleum Minister Murli Deora, Chidambaram agreed in-principle to issue oil bonds to cover one-third of the under-realisation on sale of four major petroleum products — petrol, diesel, LPG and kerosene — during 2007-08 fiscal.

The Indian basket of crude oil has risen over 30 per cent since February when petrol and diesel prices were cut by Rs 2 and Rs 1 per litre respectively.

As per the Petroleum Ministry, the basket averaged $72.76 a barrel in August as against $54-55 dollars per barrel in February.  PSU oil firms are losing Rs 5.88 per litre on petrol, Rs 4.80 a litre on diesel.