The Hindu : Front Page : Government hints at further fuel price cut

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Wednesday, Dec 17, 2008
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Government hints at further fuel price cut

Sujay Mehdudia

NEW DELHI: The Union government on Tuesday indicated that if the downward trend in the international crude oil prices continued, the prices of diesel and petrol could be reduced further.

“We will watch the movement of crude oil prices to see if further reduction is possible,” Home Minister P. Chidambaram told the Rajya Sabha during question hour.

The Petroleum Ministry had earlier this month cut petrol price by Rs.5 a litre and diesel by Rs.2 a litre as crude oil prices dipped from an all-time high of $147 a barrel in July to under $45 a barrel.

Mr. Chidambaram said the government would look into demands for further reduction in auto fuel prices. Even after the price cut, public sector oil firms were making a profit of Rs.9.98 on sale of every litre of petrol and Rs.1.03 per litre on diesel.

The further softening in global oil prices has seen these profits widen to Rs.11.48 a litre on petrol and Rs.2.92 a litre on diesel.

However, Oil Marketing Companies continue to lose Rs.17.26 a litre on PDS kerosene and Rs. 148.38 for a domestic LPG cylinder.

In a separate reply, Petroleum and Natural Gas Minister Murli Deora said the December 6 reduction was only an interim measure. “Further reduction in the prices of petrol and diesel had not been found feasible in view of the continuing under-recoveries on sale of PDS kerosene and domestic LPG.”

Decisive role

As India imports over 75 per cent of its crude oil requirement, the international oil prices have a decisive role in the domestic pricing. The basket of crude oil India imports averaged $79.25 a barrel during 2007-08 and it went up to $142.04 a barrel on July 3.

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