Petition seeking directive to firms to roll back petrol price

The Kerala High Court, on Thursday, allowed a petition seeking to implead the State government as respondent in a public interest writ petition seeking directives to the oil marketing companies to roll back the increase in the petrol price and to the Union government not to deregulate the prices of other petroleum products.

A Division Bench, comprising Acting Chief Justice C.N. Ramachandran Nair and Justice P.S. Gopinathan, issued the order when the petition filed by P.C. Thomas, chairman, Kerala Congress (Anti-merger Faction), came up for hearing.

Mr. Thomas, in the petition, challenged what he called the “hypothetical way of fixation of price” for various petroleum products (essential commodities under the Essential Commodities Act, 1955) by the oil marketing companies.

He said this stemmed from an arbitrary and irrational method of pricing called “import parity price,” based on the logic that had there been no oil-refining companies in India, the country would have imported all petroleum products and, therefore, the citizens were liable to pay for them at the import rate.

In fact, he said, the Centre conveniently concealed the fact that India was not only producing petroleum products to the extent of India's domestic need but also was exporting these to an extent of over 30 per cent.

Besides, the country was extracting domestically 25 per cent of its actual need of crude oil (in 1982, it was 75 per cent). The price of petrol was being constantly increased because of the flawed method of pricing.

He said there was no under-recovery loss and it was only imaginary. The Union government was repeating that the companies were suffering a loss of Rs.53,000 crore by way of under-recovery. However, their balance sheets showed huge profits. Since domestic refineries could supply petroleum products to meet the requirements of the country, a citizen needed to pay the price of crude oil, refining cost, a reasonable profit, marketing and storage costs, distribution cost, dealer profit, and taxes and duties.

He said the question of whether the companies were justified for charging the international market price for the crude oil extracted in India was also involved. It was most interesting to note that when the crude oil price in the international market was $148 a barrel ( in the year 2008), the petrol price in India was Rs.50 a litre, whereas when crude oil price dipped to $87 a barrel (in September 2011), the price of the petrol had gone up to Rs.68.84 a litre. As a result, the oil companies were reaping unjust enrichment by unfair way of fixation of price.

Mr. Thomas said the deregulation of petrol and diesel pricing was allowed to help oil companies, especially those in the private sector such as Reliance, and other corporates. It was against the welfare of people, who were affected by this unjust pricing. The high prices of petroleum products had raised the price of all commodities. It was during 2010 that the Centre had deregulated pricing of petrol and was now planning to deregulate the pricing of other petroleum products as well.

The petitioner sought a directive to price the petroleum products on the basis of the administrative price mechanism. He sought a directive to the Centre to stop the companies from charging customs duty from citizens on the petroleum products which were not imported.

Mr. Thomas sought a directive to the Union government to declare that the so-called under-recovery loss was not actual and to restrain them from pricing their products on the basis of such notional loss.

  • Petition filed by P.C. Thomas
  • “Hypothetical way of fixation of price” for petroleum products challenged