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Oil Min says 'immediate' need to hike fuel prices

business Updated: May 22, 2012 18:57 IST
petroleum minister

With rupee depreciation leading to jump in oil import bill, petroleum minister S Jaipal Reddy on Tuesday said there is an immediate need to raise fuel prices, but refused to say when the hike will actually take place.

"It (price increase) is very essential but (before hiking rates) we have to talk to political parties," he told reporters in Amritsar, on way to Ashgabat for signing of the agreement for the Turkmenistan-Afghanistan-Pakistan-India pipeline.

The government had decontrolled petrol price in June 2010 but rates were last increased on November 4, 2011. This despite oil price rising by 14% and 7% fall in value of rupee against the US dollar.

Price of diesel, kerosene and cooking gas were raised in June 2011.

"If rupee depreciates by one against the US dollar, our oil companies lose Rs. 8,000 crore (annually)," Reddy said. "Rupee yesterday dipped (to an all-time low of) Rs. 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs. 72,000 crore (on account of rupee depreciation) this year."

"Seeing all this, something needs to be done, but when will it be done, how it will be done... I cannot make a forecast," Reddy said. "There is no decision on raising price or not raising prices".

State-owned oil firms, who had in the fiscal ending March 31, 2012 lost Rs. 4,860 crore on petrol sales, are currently losing Rs. 6.28 per litre on petrol. After including 20% VAT, the desired increase in petrol price in Delhi comes to Rs. 7.53 a litre.