New Delhi: The Union government on Tuesday dropped hints that petrol and diesel prices may be cut further if the downward slide in international crude prices continues.
“We will watch (crude oil) prices (to see) if further reduction is possible,” home minister P Chidambaram said replying to supplementaries during the Question Hour in Rajya Sabha.
Government earlier this month cut petrol price by Rs5 a litre and diesel by Rs2 per litre as crude oil prices dipped from an all-time high of $147 a barrel in July to under $45 a barrel.
Chidambaram, the former finance minister who is answering questions pertaining to finance ministry on behalf of Prime Minister Manmohan Singh who now holds that portfolio, said the government would look into demands for further reduction in auto fuel prices.
Even after the price cut, public sector oil firms were making a profit of Rs9.98 on sale of every litre of petrol and Rs1.03 per litre on diesel. The further softening in global oil prices has seen these profits widen to Rs11.48 per litre on petrol and Rs2.92 a litre on diesel, officials said.
The oil companies, however, continue to lose Rs17.26 per litre on PDS kerosene and Rs148.38 per domestic LPG cylinder.
Indian Oil, Bharat Petroleum and Hindustan Petroleum are together projected to lose Rs111,500 crore in revenues this fiscal on fuel sales, they said.
Oil minister Murli Deora in a separate reply said the 6 December reduction was only an “interim measure”.
“Further reduction in the prices of petrol and diesel had not been found feasible (on 6 December) in view of the continuing under-recoveries (losses) on sale of PDS kerosene and domestic LPG,” he said.
Deora said public sector oil marketing companies (OMCs), IOC, BPCL and HPCL, have declared combined losses of Rs14,431 crore during the first six months of 2008-09.
Their total revenue loss on the sale of petroleum products are projected to be Rs110,381 crore during 2008-09.
The combined borrowings of the three firms at the end of November 2008 stood at Rs115,000 crore with an interest burden of Rs8,100 crore during 2008-09, he said.
“The financial health of the OMCs needs to be protected for ensuring the energy security of the country.”
As India imports over 75% of its crude oil requirement, the international oil prices have a decisive role in the domestic pricing.
The basket of crude oil India imports averaged $79.25 per barrel during 2007-08 and it went up to $142.04 a barrel on 3 July.