Retailers will raise petrol prices unilaterally, IOC warns govt
18 April 2012
Indian Oil Corp, the largest of India's three state-owned oil retailers, has warned that it and fellow oil marketing companies would raise petrol prices unilaterally if the government fails to compensate them soon for revenue losses on sales.
In a public statement, IOC said the government should ''temporarily'' consider petrol as a regulated commodity on a par with the other hydrocarbon fuels - diesel, cooking gas and kerosene, which are priced way below cost on the government's diktat - and provide cash compensation for retail sales of petrol or reduce factory gate tax on the fuel to the extent of revenue losses.
IOC said state-run refiners cannot sustain the current scenario where they import crude oil at $121.29 per barrel and sell the refined product at $109.03 per barrel.
"Continuation of such pricing will only impede the ability of the company to import crude oil and may affect product supply-demand balance," IOC said. It added the alternative was to "increase the price of petrol by Rs8.04 per litre (excluding state levies) with immediate effect."
The companies last previously raised petrol prices on 1 December. Prices of petrol, which the government considers a 'luxury' fuel, were officially decontrolled in June 2010; but since the oil marketing companies are state-owned, the government continues to exert pressure on its pricing.
In its monthly policy review today, the Reserve Bank of India too advocated raising oil retail prices.
"It is imperative for macroeconomic stability that administered prices of petroleum products are increased to reflect their true costs of production," RBI governor Duvvuri Subbarao said.