New Delhi: The Cabinet headed by Prime Minister Manmohan Singh may meet on 23 May to consider raising petrol and diesel prices among other measures to bailout state run firms that have been reeling under spiralling crude prices.
With Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) projected to lose Rs200,000 crore in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs2 - 5 per litre appears on the cards.
Petroleum Minister Murli Deora on his part neither denied nor confirmed Cabinet being scheduled for 23 May.
“We are discussing all possible measures to help and protect our public sector oil companies. Some remedial measures need to be taken urgently,” he told reporters.
The three firms are currently losing Rs450 crore in revenues on fuel sales every day. Petrol is being sold at a loss of Rs16.34 a litre, diesel at Rs23.49 per litre, LPG at Rs305.90 per cylinder and kerosene at a discount of Rs28.72 per litre.
“I cannot rule in or rule out anything at this stage,” Deora said when asked if petrol and diesel prices hike was an option under consideration.
“We are concerned at the financial health of the PSUs,” he said, but asked the consumers not to panic.
“There is no rationing of fuel as has been reported by one newspaper. We can never resort to such an anti-consumer practice. I have spoken to BPCL Chairman Ashok Sinha who has categorically denied such a move,” he said.
Deora said state-run retailers IOC, BPCL and HPCL were under severe financial strain and may have taken some measures to cut cost but fuel rationing was not being resorted to.
In Asian trade on 22 May, New York’s main oil futures contract, light sweet crude for July delivery, rose to a high of $135.04 a barrel before easing to $134.87.
The three firms are faced with a huge liquidity crunch and are borrowing Rs3,500 crore a month to meet day-to-day expenditure. Borrowings of the three firms have reached Rs65,000 crore.
The government makes up for just over half of the under realisation of oil companies on fuel sales through issuance of oil bonds, while 33% of the losses are compensated by companies like ONGC and GAIL India. The rest is borne by the retailers.