With global crude oil prices skyrocketing to $135, in an election year, the government is examining drastic policy options, including raising petrol and diesel prices. Petroleum Minister Murli Deora is meeting heads of state-owned oil firms on Friday and is likely to brief Prime Minister Manmohan Singh thereafter. The dizzy rise in global crude levels has left the finances of state-owned oil firms crippled.
“We will not allow oil companies to suffer,” Prime Minister Manmohan Singh told reporters on Thursday, the fourth anniversary of the UPA government.
<b1>With oil marketing companies — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) — facing under recoveries to the tune of Rs 580 crore a day, revenue losses of public sector enterprises are expected to cross Rs 2,00,000 crore in 2008-09, if immediate steps are not taken.
This could lead to petrol, diesel and LPG shortages as the companies would be left with little funds to import crude, whose prices have risen by around 50 per cent over the past year.
India imports about 70 per cent of its total crude requirement and government faces the twin challenge of containing import and subsidy bills and maintaining retail fuel prices at reasonable levels in an election year.
“We are discussing all possible measures to help and protect our public sector oil companies,” Deora told reporters on Thursday.
"Some remedial measures need to be taken." "We are concerned about the financial health of public sector oil companies," he said but denied companies were rationing sales of petrol and diesel to prevent losses.
"We can never resort to such an anti-consumer practice," Deora added. "There is no rationing of fuel as has been reported by one newspaper... I have spoken to BPCL chairman Ashok Sinha who has categorically denied such a move," the minister said.
However, Hindustan Times reporters checked close to 20 petrol pumps in Mumbai and Delhi and found that some pumps remained closed between 7 pm and 7 am.
At other pumps they were either asked to buy premium or mix premium petrol and normal fuel in a ratio of 50:50, or told non-premium varieties were over. These practices are not restricted to petrol or diesel alone. At the time of booking LPG, BPCL dealers are reportedly questioning consumers on their usage patterns. Petrol and diesel prices were increased by Rs 2 and Re 1 a litre respectively in February. The Left parties had sought a tax rejig to insulate consumers from fluctuations in global oil prices.
Making matters worse for policymakers is the fact that the option of issuing oil bonds is increasingly difficult. Analysts are also questioning the rationale of passing on the burden of rising prices to the future generations by long-term bonds to oil companies.