May 22 2008
Govt may hike fuel price by Rs 5 a litre!
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).
