Government rules out any immediate reduction in fuel prices
22 Oct 2008
Mumbai: The government has ruled out the possibility of an immediate reduction in the administered prices of petroleum fuels, at current crude prices, but has promised a price review if global crude prices fall below $67 a barrel.
''Our administered prices of petrol, diesel, LPG and kerosene are based on Indian basket calculated at $67 a barrel. Reduction in crude oil prices has helped but not to the point where we can roll back the prices,'' finance minister P Chidambaram told the Lok Sabha.
He said while a fall in the price of crude oil has helped rein in inflation, it has not come down to the expected level to warrant a reduction in fuel prices.
Only when crude prices fall below $67 a barrel, would oil companies be able to make a profit, Chidambaram said, adding, ''Even at $71 or 72 a barrel, there is an element of subsidy. There is under-recovery. Even though under-recovery has come down, we are not making any profit'' he said.
Chidambaram pointed out that although crude oil prices had declined to about $70 a barrel, they were still above the Indian basket price of $67. As a result, ''even today, there is an under-recovery in every litre of petrol, every litre of diesel, every cylinder of gas and every litre of kerosene that is sold. Therefore, we have not reached a point where under-recovery is being wiped out,'' he said.
