labels: Economy - general
Deora rules out reduction in fuel prices news
01 September 2008

Mumbai: The government has no plans to effect a reduction in fuel prices despite a big dent in the prices of crude oil over the past one month, petroleum minister Murli Deora said today.

''Where is the scope for reducing prices? Oil companies are still making losses," Deora asked reporters.

State-run oil companies are still running daily losses of around Rs400 crore on fuel sales despite softening in international oil prices. If at all, the impact of lower crude prices had only been marginal, in that the daily losses have now come down from Rs450 crore to Rs400 crore.

''Oil companies continue to lose money on sale of petrol, diesel, (domestic) LPG and kerosene. There has not been so much reduction in global prices to warrant a price cut," petroleum secretary R S Pandey said.

The fall in the prices of crude oil from its July high of over Rs147 a barrel to below $120 a barrel is expected to help the country save at least $17 billion in oil bill this fiscal alone.

The price of the Indian basket of crude oil averaged $113.12 per barrel in August, down from $121-122 a barrel in June when the government announced a hike in the prices of petrol, diesel and domestic LPG.

With crude still at $145 a barrel, the country's oil import bill for the current fiscal would have soared to $125 billion. however, with the reversal in price movement, the country's crude import bill would now be limited to $108 billion, according to  industry body Assocham's study on `Crude Economics',  published in the 'Eco Pulse.'

Public sector oil firms, meanwhile, announced an over 16 per cent rise in the prices of aviation turbine fuel (ATF) or jet fuel beginning 2 September.

Oil PSUs are losing heavily on subsidised oil sales and import of high-cost crude from overseas markets. Indian Oil Corporatuion, the countrys' largest oil marketing company, controlling about 54 per cent of the market, is projected to lose Rs90,630 crore on fuel sales this fiscal.

The company loses Rs11 crore per day on sale of petrol, Rs112 crore daily on sale of diesel, Rs 63 crore per day on kerosene and Rs32 crore per day on LPG.

The government is expected to keep the 2010 deadline for the introduction of Euro IV grade fuel in the country and may ask state refiners to expedite upgradation of their units to meet the schedule.

Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum had asked the petroleum ministry to postpone the deadline for beginning supply of Euro IV fuel in major Indian cities from 2010 to 2015.

While the upgradation is expected to make a further dent in the revenues of the three oil distributors, it will also call for increased investments by the three public sector oil companies.


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Deora rules out reduction in fuel prices