Oil companies holding out on relief?

Despite sitting on positive margins of more than Rs. 1 per litre, following softening of international oil prices in the past fortnight, the three state-owned oil companies have refrained from making any reduction in the consumer price of petrol. HT reports.

Did you lose out on a petrol price cut? Are fuel price rules being violated?

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Despite sitting on positive margins of more than Rs. 1 per litre, following softening of international oil prices in the past fortnight, the three state-owned oil companies have refrained from making any reduction in the consumer price of petrol.

Petrol is decontrolled and domestic prices are fixed in line with global prices. Under the present system, oil firms revise prices on the 15th and last day of every month; and for the fortnight ending October 31, oil companies have an overrecovery or profit on petrol of over Rs. 1 per litre, which they should have passed on to consumers.

"While logically we should have passed on this benefit to consumers as we have a positive margin of close to Rs. 1 a litre, but this is unlikely to happen this time," said a senior management official of an oil company.

He, however, said that oil companies fear that following Hurricane Sandy, refineries in the US have been closed and going forward, this prompt global petrol prices to go up.

"If petrol prices move up in the international market, it will impact our domestic prices, but due to elections in Himachal Pradesh and Punjab, oil companies may not be allowed to hike petrol prices in the next two months," he said. "So, we are holding on to these margins on petrol."

Whatever be the compulsions, experts view this is as a clear mockery of the deregulation process. "Oil companies and the government are clearly taking consumers for a ride by following ad hoc practices for revising the prices for petrol," said a former petroleum ministry secretary.