Refiners vow to rollback petrol price if crude prices fall
India's largest oil refiner Indian Oil Corp today defended a sharp hike in petrol prices that triggered protests and a political backlash, and vowed to rollback the measure if international oil prices fall.business Updated: May 24, 2012 18:46 IST
India's largest oil refiner defended on Thursday a sharp hike in petrol prices that triggered protests and a political backlash, and vowed to rollback the measure if international oil prices fall.
The state-run oil firms announced a steep 11.5% increase in the price of petrol on Wednesday to offset growing losses caused by subsidised rates, rises in the international oil price and a plunging rupee.
Indian Oil Corp. chairman RS Butola said the refiners had been forced to impose the price hike after sustaining losses of up to Rs 500 million rupees a day since the start of the current financial year on April 1.
"Unfortunately all our options were exhausted," Butola told reporters.
"But if international prices come down, we would pass on the benefit to consumers," he added. "We are committed to do that."
Butola's remarks came hours after opposition parties called a national one-day strike for next week to protest against the price hike of 6.28 rupees per litre.
"Common people are suffering due to wrong policies," said Sharad Yadav, convener of the opposition National Democratic Alliance.
"Prices of commodities are rising uncontrollably making it difficult for an average Indian to make both ends meet," he said, calling for all shops and offices to close and vehicles to stay off the roads next Thursday.
The Congress party-led government deregulated petrol prices in 2010 in a reform aimed at reducing the massive subsidies it pays to state-run fuel refiners, which rely on imported energy.
Butola denied reports that Thursday's increase had been government-imposed, insisting that the decision had been made by the refiners' themselves for purely economic reasons.
A series of much smaller petrol price increases last year caused an internal revolt, with the second-largest party in the coalition threatening to pull out unless the price hikes were rolled back.
India imports more than three-quarters of the crude oil it requires, and the import bill has risen dramatically because of high global prices and a plunging rupee.
The Indian currency fell to a new all-time low against the dollar for the seventh straight day on Thursday, hitting Rs 56.36 against the greenback.
The high cost of imported fuel is partly blamed for the ballooning of India's current-account deficit -- the gap between exports and goods and services imports -- to its widest level in eight years.