Government to ensure financial health of oil PSUs

The government will ensure financial health of oil marketing companies even as it is committed to make available petroleum products of the right quality at reasonable prices to consumers, minister of petroleum and natural gas S Jaipal Reddy said today.

Addressing a meeting of the consultative committee of members of Parliament attached to his ministry, he stressed that the long-term energy security of the country depended on the financial health of the oil marketing companies.

"If their financial health deteriorates on account of the price under-recoveries, their ability to discharge their assigned task of supplying the entire country with petroleum products would suffer," he added.

The meeting was called to discuss the issue of under recoveries of state-run oil marketing companies, which are forced to sell fuels at exorbitantly low prices in order to save the consumer the burden of high international prices of crude oil.

After the extreme volatility of crude prices in 2008-09, the international prices of crude oil have consistently risen in the recent past. The average price of the Indian basket of crude oil, which was $69.76 per barrel in 2009-10, is hovering around $112 per barrel in the current year, he pointed out.

And, in spite of the recent price increase, reduction in customs and excise duties, the OMCs are suffering under-recoveries to the tune of Rs235 crore per day and are expected to incur under-recovery of over Rs1,21,000 crore during 2011-12, he said.