'People have to bear burden of oil price rise'

Finance Minister Pranab Mukherjee today said the burden of oil price rise will have to be borne at least partly by the people as oil marketing companies were unable to sell at earlier rates as global crude oil had got costlier.
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Updated on Jan 28, 2011 04:51 PM IST
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IANS | By, New Delhi

Finance Minister Pranab Mukherjee on Friday said the burden of oil price rise will have to be borne at least partly by the people as oil marketing companies were unable to sell at earlier rates as global crude oil had got costlier.

"Oil marketing companies cannot make money from heaven. The price rise has to be passed on," Mukherjee told reporters at an informal luncheon here.

The freedom to price petrol as per market conditions was given to oil retailers last and accordingly prices of petrol was hiked for the fifth time in 2010 by Rs.2.95 per litre. The hike was necessitated by the rise in global crude prices to $90 per barrel.

Asked how retail petrol prices were now inching towards Rs.60 a litre, as against Rs.52 in 2008 when crude oil was at $147 per barrel, Mukherjee said this was because of general price rise, cost of local production and other activities.

As per government estimates, the impact of selling fuel below cost -- referred to as under recovery in oil industry jargon -- will be Rs.4.17 per litre on petrol and Rs.5.40 on diesel, amounting to Rs.65,000 crore for the fiscal year as a whole.

Mukherjee also hinted that it was not possible to give any more subsidy to oil marketing companies during this fiscal.

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