PETROLEUM MINISTER Murli Deora and Finance Minister P.Chidambaram met Prime Minister Manmohan Singh on Monday to discuss a package for public oil marketing companies.
The oil companies have been facing revenue losses of Rs 190 crore a day due to the government's decision not to revise retail prices of petrol, diesel, kerosene and liquefied petroleum gas inspite of a surge in global crude oil prices.
The retail prices of petrol and diesel were last revised in mid-February when the government reduced the price of petrol by Rs 2 a litre and diesel by Re1. The government had then pegged the average crude price at $56 per barrel. The average basket of Indian crude oil is hovering around $75 per barrel.
The petroleum ministry wants the finance ministry to issue bonds of nearly Rs 12,000 crore for the first half of the current fiscal to help state-owned oil companies overcome losses they have incurred over the last several months. Apart from this, the oil ministry also favours excise duty reduction on diesel.
Though suggestions have been made in the past few weeks on revising retail prices of key petroleum products to improve the financial health of the oil companies, sources said a decision was unlikely. Raising the prices of petrol and diesel may not be “politically feasible”, they said.
Another meeting between key ministers of the government is likely to be scheduled later to resolve contentious issues.According to estimates, petrol is being sold at a loss of Rs 2.79 per litre, while diesel is priced Rs 4.65 a litre below the cost. Oil companies lose Rs 15.50 on the sale of every litre of kerosene; Rs 178.15 on the sale of every LPG cylinder.
In the first quarter of the current financial year (April-June), IOC, BPCL and HPCL together lost Rs 1,553 crore on petrol sales, Rs 4,633 crore on diesel, Rs 4,028 crore on kerosene and Rs 2,698 crore on domestic LPG.
As a result, the under recoveries in the first three months of the financial year were to the tune of Rs 12,912 crore. During 2007-08, losses of public sector oil firms on petrol, diesel, LPG and kerosene sales have been an estimated Rs 52,162 crore.