A day after State-owned oil companies pressed for a petrol price hike, the Petroleum Ministry today said it is up to the oil firms to decide on raising the rates of the deregulated commodity.
“It is for them (oil companies) to decide. They will take a decision at a right time,” Oil Secretary G.C. Chaturvedi told reporters here.
Hindustan Petroleum Corporation Ltd (HPCL) Director (Finance) B. Mukherjee had said on Tuesday that oil firms may have to raise petrol prices, as they were losing Rs. 1.50 per litre at the current rates.
Mr. Chaturvedi said petrol is a deregulated commodity whose pricing is not decided by the government. “The oil companies are empowered to take a view on it,” he said.
Indian Oil, HPCL and Bharat Petroleum had last hiked petrol prices by Rs. 3.14 a litre on September 16, when the Indian rupee was valued at about Rs. 48 per U.S. dollar. The exchange rate is now over Rs. 49 per U.S. dollar.
“From today, there are some losses on petrol. To cover them, we may have to increase prices,” Mr. Mukherjee had said on Tuesday.
He had stated that crude oil is hovering at around $108 per barrel in international markets. At the current exchange rate, the petrol price of Rs. 66.84 per litre in Delhi is equivalent to a crude oil price of about $102 per barrel.
The government had in June last year deregulated, or freed, petrol from all price controls, but the retail rates have not moved in line with the cost as high inflation forced the oil companies to seek “advice” from the parent Oil Ministry before revising rates.
Mr. Mukherjee did not say when petrol prices would be hiked. “We are in consultations,” he said, without elaborating.
The loss on petrol is currently Rs. 1.50 per litre and after including local levies, the desired increase in retail prices is Rs. 1.82 per litre.
“Let’s say, we are toying with the idea,” he said. “It may happen. We will see,” he added.
Besides petrol, the three firms are losing Rs. 333 crore per day on selling diesel, domestic LPG and kerosene below cost. They lose Rs. 9.27 per litre on diesel, Rs. 26.94 per litre on kerosene sold through the public distribution system (PDS) and Rs. 260.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.
At the current rate, the industry is projected to lose Rs. 121,459 crore in revenue on the sale of diesel, domestic LPG and kerosene in the full fiscal.
While the loss on these three products is compensated through a combination of government cash subsidy and upstream oil firm dole-outs, there exists no such mechanism for making good the losses on petrol, as the product is deregulated.