New Delhi: Petroleum Minister Murli Deora said on 1 November the government is exploring ways to overcome high crude prices, but declined to comment if state-run oil companies will be allowed to increase fuel prices at home.
Deora met with Finance Minister P. Chidambaram and other government officials to discuss surging global oil prices and its impact on consumers and state-run refiners.
India imports more than 75% of the crude oil its economy needs. Any increase in international crude prices hurts India’s state-run oil refiners, which control about 90% of the domestic fuel market, because the government sets retail prices of gasoline, diesel, kerosene and cooking gas to shield consumers.
Retail prices of these fuels were last increased in June 2006 and Deora’s top aide told reporters last month that the government had no plan to increase fuel prices until next March. But the situation in the global market has since changed.
Light, sweet crude for December delivery rose as high as $96.24 a barrel in electronic trading on the New York Mercantile Exchange on 30 October, and some analysts predict it could surpass $100 a barrel soon.
“We have come here to discuss what are the solutions. Oil prices have crossed $95 (a barrel),” Deora told reporters as he went into a meeting with the finance minister.
The government estimates that state-run oil companies could incur a combined loss of about Rs550 billion (Rs55,000 crore; $13.8 billion) in the current fiscal year ending March 2008.
Last month, the government moved to offset a part of those losses by issuing the oil companies bonds worth Rs234 billion ($5.8 billion). But oil companies say that is not enough and that they should allowed charge consumers more for fuel. The chairman of Indian Oil Corp., the country’s largest refiner, was also attending the meeting.