No relief for consumers as crude declines: CNBC

13 October 2006

Global crude oil prices are falling, but there will be no relief for consumers. The government will not reduce retail prices of petrol and diesel.

CNBC-TV18 learns that instead the government has decided to give itself a Diwali gift. It will issue oil bonds for Rs14,000 crore, half the amount approved by the cabinet committee on economic affairs.

This because the finance ministry thinks that oil firms will lose much less than the Rs73,500 crore projected earlier.

When the government hiked auto fuel prices in June, the average crude price for the month was $67. The oil ministry had assumed a price range of $68 to 75 for the rest of the year.

It was partially proved right in July and August when prices hovered around $71. Since then, crude prices have tumbled by as much as $10 in September.

While oil firms are still making huge losses on cooking gas and kerosene, on petrol the margins have turned positive. On diesel, losses have come down from Rs6 a litre to 93 paise.