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Updated: February 16, 2011 02:28 IST

No plans to hike oil prices now: Jaipal Reddy

Special Correspondent
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Union Petroleum and Natural Gas Minister S. Jaipal Reddy. File photo
The Hindu Union Petroleum and Natural Gas Minister S. Jaipal Reddy. File photo

Spurt in international oil prices will cause Rs.80,000 crore of revenue losses

Union Petroleum and Natural Gas Minister Jaipal Reddy on Tuesday said the government had no plans to increase the price of petrol and diesel despite international crude oil rates having touched the $100 per barrel mark.

“We are not at the moment thinking of increasing prices,” he told journalists here.

The spurt in international oil prices meant that state retailers would end the fiscal with around Rs.80,000-crore revenue losses on selling diesel, domestic LPG and kerosene below cost. “The oil marketing companies are facing a burden to the tune of Rs. 80,000 crore and maybe it could touch Rs.100,000 crore this fiscal,” he said.

Referring to petrol, whose price the government had decontrolled last June, Mr. Reddy said there was no proposal to raise prices just now.

The State-owned Indian Oil Corporation, Bharat Petroleum Corporation Limited and the Hindustan Petroleum Corporation Limited, which have raised petrol prices seven times since June last year, currently sell petrol at a loss of Rs. 1-2 per litre. “At the moment, there is no proposal on table of oil companies to increase the price of petrol. Pubic opinion cannot be ignored even in free market,” he remarked.

Mr. Reddy said that half of the revenue loss retailers incurred on selling diesel, domestic LPG and kerosene would be met by the government by way of cash dole-out. Another one-third would be contributed by upstream firms like the Oil and Natural Gas Corporation (ONGC). The rest would “somehow be digested by oil marketing companies.

Petroleum Secretary, S. Sundareshan said that of the Rs. 46,000-crore revenue loss on fuel sales in the first three quarters this fiscal, the government provided Rs. 21,000 crore and upstream firms contributed one-third.

Mr. Reddy expressed hope that the Finance Minister would cut customs and excise duty on crude oil and products in the budget to ease the burden of rising global oil prices.

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Andher nagari chaupat raja: One cannot have more absurd petro products pricing policies. Petrol is selling at Rs 64 per liter while LPG giving same amount of energy is available at Rs 18 and kerosene at Rs 12 although for cooking but there is no control over end use of both. Petro products are giving Government taxation of Rs 100000 crore plus each year and government says there is under recovery of Rs 100000 crore this year. Though indigenous substitutes of imported and costly cooking fuels are available in form of free infinite solar thermal and dirt cheap induction yet cooking are needlessly and grossly subsidized and though no non-oil substitutes of inflationary motor fuels are there yet those are being taxed heavily specially petrol. Governments think that petrol is rich men's fuel but 90% of it is directly or indirectly serves the purpose of middle class and poor in form of two wheeler and public transport fuel. With excess refining capacity and need of economy of cheaper energy oil and gas sector could have been used well for rapid growth rather than its being in dismal current state of affairs.

from:  Alok
Posted on: Feb 16, 2011 at 16:48 IST

I guess oil is trading at 83$ per barrel and has decreased significantly in the past one week. Time to roll back petro prices by atleast 2 -3 Rs per litre which would defuse inflationary trend as well

from:  Yash
Posted on: Feb 16, 2011 at 12:05 IST
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