A clear indication of the shift in the thought process of the policy makers to align the prices of domestic fuel--petrol, diesel, cooking gas and kerosene—with international crude oil prices came after petroleum minister Murli Deora on Thursday evening said that the subsidy support by the government (to insulate the consumer from the impact of high global oil prices) is “not sustainable in the long run.”
While addressing the Parliamentary standing consultative committee, Deora indicated that state-run oil marketing companies Indian Oil, Hindustan Petroleum and Bharat Petroleum are likely to lose Rs 45,478 crore this fiscal on selling fuel below cost.
“Today, the public sector oil marketing companies incurs an under-recovery (revenue loss) of Rs 3.10 per litre on petrol, Rs 2.55 a litre on Diesel, Rs 17.30 per litre on PDS kerosene and Rs 241.00 on each 14.2 kg cylinder of domestic LPG,” he said.
In the second quarter ended September 30, IOC reported a meager profit of Rs 284 crore while BPCL and HPCL reported losses of Rs 159 crore and Rs 137 crore respectively.
“The OMCs are the backbone of the country's energy security and, hence, their financial health is a cause of concern for us,” he said.
Deora said the government had taken measures to insulate the consumer from the inflationary impact of high global oil prices last year. The government in the last fiscal had issued oil bonds worth Rs 71,292 crore to the three fuel retailers while upstream firms absorbed another Rs 32,000 crore of oil price impact.