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OMCs Ask Oil Min to Regulate Petrol Prices Again

  • OMCs like Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd are compensated by the government for selling diesel, kerosene and liquefied petroleum gas (LPG) at centre-fixed prices. However, the companies are finding these compensations inadequate.Therefore, this move comes as a desperate attempt by OMCs to curb the burgeoning under recoveries due boiling global oil prices.Speaking on the matter, RS Sharma, former chairman of ONGC said, “petrol should be regulated to make the process more transparent. The current subsidy support is not enough for OMCs.”

  • Sharma further said, “on paper, petrol stands deregulated. OMCs are not being allowed to adhere to the market prices. So this is the fallacy and they want to correct it at least for the sake of transparency and they must let it be included as a part of regulated commodities.”“For the government to regulate the oil prices now on paper will be a great embarrassment. I don't think that is going to happen,” Sharma added.”

  • On a similar note, PK Goyal, Director (finance), Indian Oil Corporation, said that the company has not been able to hike petrol prices since December 6, 2011. Goyal further said, “government can intervene in petrol pricing despite deregulation. It can also intervene in times of high global oil prices.” He said that the company has taken up administered price mechanism issue with the government. “Petrol under recoveries are currently at Rs 4,500 cr,” Goyal added.

  • Here are the other details on the matter:

- OMCs still have to wait for the government’s approval to raise prices

- No dispensation given for petrol sales

- India partially deregulated fuel prices in June 2010

- OMCs may witness a 52% jump in losses

  • Under-recovery rise

- Under recovery of petrol lower than diesel, LPG & Kerosene now

- OMCs lose approximately Rs 486 cr per day on sale of petrol

- OMCs losing Rs 4/litre on petrol currently

- Under recoveries of Rs 13.1/litre on diesel currently

- Under recoveries of Rs 28.67/litre on kerosene currently

- Under recoveries of Rs 439.5/ cylinder currently for LPG

- OMCs expected to lose around Rs 1.3 lk cr for FY12 over subsidized sales

- IOC, HPCL, BPCL lost Rs 97,300 cr on selling diesel, LPG, kerosene in FY12

- Upstream oil companies asked to give fuel subsidy of Rs 36,900 cr for 9MFY12

Source