The Hindu : Kerala / Kochi News : Fuel price rise uncalled for?

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Saturday, Jul 04, 2009
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Kerala - Kochi

Fuel price rise uncalled for?

S. Anandan

RISING COSTS: Vehicles wait for petrol at a pump near Durbar Hall in Kochi in this file picture.

Kochi: Even as a debate on whether the latest petrol and diesel price hike was warranted, a city-based non-governmental organisation, armed with evidence to the contrary, attributes the rising debt of oil public sector units (PSUs) to factors other than the retail price of petrol and diesel.

As per the information obtained by ‘The Proper Channel’ through Right to Information (RTI) petitions, domestic production of crude oil in 2008 was 34.133 MMT (million metric tonne). In other words, the country last year produced 2,68,343 barrels of crude oil.

Data available with the Union Ministry of Petroleum and Natural Gas shows that over 1.43 crore kgs of LPG (liquefied petroleum gas); 40 lakh litres of petrol; 22 lakh litres of kerosene; and about 1.5 crore litres of diesel have been distilled, besides by-products such as oil and lubricant, from that much crude oil.

The import of crude oil last year was 83.5 MMT.

“Rationally, a barrel of crude oil yields 65 litres of petrol, 85 litres of diesel, 26 litres of aviation spirit and 32 litres of kerosene. If the average price of crude oil per barrel is pegged at $50, the products thereof together fetch $320,” says M.K. Haridas of The Proper Channel. The loss incurred by oil PSUs ostensibly due to non-revision of petroleum product prices in December last year was over Rs. 1.06 lakh crore.

Mr. Haridas attributes the humungous loss to mismanagement of the public companies and irrational pay and perks of the employees.

“The government has subsidised LPG by Rs 97.11 per cylinder. But over half of the State’s 50 lakh LPG consumers do not require such subsidy,” he says. “Diesel rates were kept low during the Nehruvian era as it was the common man’s fuel. It was primarily used in public transport.

“Now even high-end luxury cars running on diesel enjoy the concession. Kerosene subsidy and import tax concession are also being misused by unscrupulous bus and lorry operators. However, exorbitant taxes should singularly take the blame for giving rise to the current scenario. While a litre of petrol only has a production cost of Rs.14, various Central and State taxes place a huge burden on the consumers.

“If excise tax on petrol is reduced and unified, international crude oil price fluctuation wouldn’t affect the retail price of petroleum products, thereby easing the burden on the common man,” says Mr. Haridas.

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