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PM rules out immediate cut in fuel prices

business Updated: Nov 11, 2008 12:20 IST
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Ruling out an immediate reduction in petrol and diesel prices, Prime Minister Manmohan Singh has said the government will wait till public sector oil companies break-even on fuel sales before considering such a move.

International crude oil prices have slid from an all-time high of US $147 to US $60 a barrel, but public sector oil companies continue to make losses on sale of diesel, domestic LPG and kerosene.

"When we see that the Indian oil companies are able to sustain a reduction that will be the right (time for such a) decision," he told reporters on way back from his three-day maiden visit to the energy-rich Gulf region.

Though Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have started making profit on sale of petrol, they lose about Rs 155 crore per day on sale of other three products.

"Oil companies have to bear a very heavy burden (and) there are limits to which government can go on subsidising," he said.

Government compensates half of the revenue loss on fuel sales through oil bonds and one-third of the losses are borne by cash-rich firms like ONGC.

Yet, IOC posted its largest-ever net loss of Rs 7,047.13 crore in July-September quarter. BPCL posted a net loss of Rs 2,625.17 crore in the second quarter on top of Rs 1,066.70 crore in April-June, while HPCL reported a loss of Rs 888.12 crore in Q1 and another Rs 3,218.92 crore in Q2.

"If prices keep on going down, we can explore these possibilities (of reducing prices)," the Prime Minister said.

Oil firms make a profit of Rs 4.12 a litre on petrol but lose Rs 0.96 on every litre of diesel, Rs 22.40 per litre on kerosene and Rs 343.49 per LPG cylinder.