Rising crude oil prices a matter of concern for government and consumers

The rising prices of crude oil in the international markets, which touched $85 a barrel, could result in Indian oil marketing companies' (OMCs) under recoveries, touching a whopping Rs.90,000 crore in the current financial year, a matter of concern for the government and the consumers.

Painting a grim picture of what could be in offing for the consumers and the OMCs selling petrol, diesel, LPG and kerosene at subsidised prices, Petroleum Secretary S. Sundereshan said the rising oil prices were a cause for concern and if this trend continued then the current financial year could well turnout to be a difficult year and the under recoveries of the OMCs could touch around Rs.90,000 crore.

“We have a formula in place for the 2009-10 situation and will be compensated for it. But what is worrying us is that no such formula has been agreed upon for 2010-11 and this could prove to be difficult situation,'' he told visiting Indian journalists during a briefing here.

Petroleum and Natural Gas Minister Murli Deora said India would work towards fulfilling its commitments outlined in the Cancun declaration and would give a practical shape to the intent of the document.

There had been a demand by the International Energy Agency to India and China to come out with enhanced data on their stockpiles, demand and supply situation. Mr. Deora also ruled out the possibility of government going in for another fuel hike in view of the rising crude oil prices and the massive losses being incurred by the OMCs.

The Finance Ministry had given the OMCs over Rs.12,000 crore in cash cover for their losses in last fiscal, a far cry from Rs.29,405 crore they sought. The next instalment is expected to be released by April. IOC, BPCL and HPCL are projected to lose Rs.29,405 crore on sale of domestic LPG and kerosene below cost. Another Rs.12,000 crore loss is projected on petrol and diesel.

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