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The government finally announced on Wednesday a significant hike of Rs 5 in petrol prices and Rs 3 in diesel price to decrease the pressure on the oil companies facing losses for a long time due to increase in international fuel rate which have touched levels as high as USD 135 per barrel. LPG gas cylinder rates are also gone up by Rs 50. There is no hike in Kerosene prices.

The huge subsidy loss faced by the public sector oil companies has led the government to impose the hike. State-run Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum were together projected to lose Rs 2,46,600 crore on sale of petrol, diesel, domestic LPG and PDS kerosene in 2008-09 in absence of any price hike or duty cuts. Earlier in the day, the Cabinet Committee on Parliamentary Affairs had approved the hike in fuel prices.

Petroleum Minister Murli Deora has also proposed double price for extra cooking gas cylinders. He has also proposed a new distribution scheme for LPG cylinders. Only 8 cylinders will be allowed at the current rates. All extra cylinders will cost twice the amount.

After 10 days of debate over the price increase, the cabinet also agreed to cut the import duty on crude oil to support refining and retailing firms like Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp.

It is the second hike in the fuel rates in this year. On February 14, 2008 the price of petrol were hiked by Rs 2 and that of diesel by Re 1 a litre.

Prime Minister Manmohan Singh has already warned on Monday that government is not in a position to fully insulate the consumer from the impact of rising oil prices. He will address the nation at 8:30 pm on Wednesday night to explain the reason for the hike in fuel prices.

People are very upset with the announcement. They are protesting the hike. Public came out at roads and shouts slogan against the decision.

Opposition parties which are already protesting the hike are also protesting the decision. Unhappy at the hike, Left has said the decision as ‘Suicidal Move’. CPI announced a bandh in Kolkata against the hike.

Price of Petrol, currently 45.52 a litre in Delhi, will be now Rs 50.52/Lt, while diesel, which retails at 31.76 rupees, will cost Rs 34.76/Lt.

Tags: Diesel, Fuel Crisis, Fuel Price, Increament in Prices, LPG, Petrol, Price hike

Due to the rising crude oil price in international market, a decision to hike the fuel prices in India may be taken tomorrow. The Cabinet headed by Prime Minister Manmohan Singh may meet on Friday to consider raising petrol and diesel prices.

Increasing crude price left the oil firms under pressure. With Indian Oil, Hindustan Petroleum and Bharat Petroleum projected to lose Rs 200,000 crore (Rs 2,000 billion) in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs 2 to 5 per litre appears on the cards. International crude prices reached an untouched height of $135 a barrel.

The three firms are currently losing Rs 450 crore (Rs 4.50 billion) in revenues on fuel sales every day. Petrol is being sold at a loss of Rs 16.34 a litre, diesel at Rs 23.49 per litre, LPG at Rs 305.90 per cylinder loss and kerosene at a discount of Rs 28.72 per litre. It will bailout state run firms that have been reeling under unprecedented high crude prices.

The three firms are faced with a huge liquidity crunch and are borrowing Rs 3,500 crore (Rs 35 billion) a month to meet day-to-day expenditure. Borrowings of the three firms have reached Rs 65,000 crore (Rs 650 billion).

Asked about the tomorrow meet Petroleum Minister Murli Deora neither denied nor confirmed Cabinet being scheduled for Friday.

“We are discussing all possible measures to help and protect our public sector oil companies . . . some remedial measures need to be taken (urgently),” he told reporters.

“I cannot rule in or rule out anything at this stage,” Deora said when asked if petrol and diesel prices hike was an option under consideration.

“We are concerned at the financial health of the PSUs.” he said.

Despite of the cost of raw material (crude oil) doubling to over $135 a barrel, government has not made any considerable hike in fuel prices which leads a revenue loss of Rs 200,000 crore to the three firms at the end of the current year. Last year, the revenue loss was Rs 77,304.50 crore (Rs 773.45 billion).

Tags: Bharat Petroleum, Diesel, Hindustan Petroleum, India, Indian Oil, LPG, Manmohan Singh, Oil Prices, PM