The government on Tuesday indicated that retail prices of fuel could be reduced if international crude prices fell.
"The government is monitoring the international oil prices closely and will take appropriate pricing decisions to protect the interest of the common man, particularly the vulnerable sections of the society," Petroleum Minister Murli Deora said Tuesday in the Rajya Sabha.
The government had raised the prices of petrol and diesel by Rs.4 and Rs.2 a litre respectively from July 2.
Deora said the price hike had helped the state-owned oil marketing companies (OMCs) reduce their under-recoveries for July from Rs.4,870 crore to Rs.2,880 crore.
These companies have huge under-recoveries as the government sells fuels, especially kerosene and cooking gas, at highly subsidised rates.
Making his statement at the start of debate on calling attention motion in the Rajya Sabha, Deora said despite the price rise, the OMCs were losing Rs.1.01 per litre on petrol and two paise per litre of diesel.
"The OMCs' financial health is a matter of concern to the government. The OMCs' under-recoveries have compelled them to borrow heavily to meet their cash flow requirements," he said.
Deora also said the total borrowings by the three OMCs - Indian Oil, Bharat Petroleum and Hindustan Petroleum - had ballooned to Rs.107,115 crore last December, before falling to Rs.88,900 crore in March.
The minister also said the oil companies have projected a total plan outlay of Rs.57,475 crore for investment in exploration and production.
"The oil PSUs will not be in a position to carry out these capex programmes during the year as planned, if their financial health is not sound. The oil PSUs are the backbone of the country's energy security and their sound financial health is a pre-requisite for ensuring smooth and uninterrupted distribution of the essential fuels across the country," Deora added.