“Oil companies will soon find it difficult to get loans from Indian banks, let alone foreign banks,” oil minister S Jaipal Reddy said, adding that the companies were borrowing heavily to meet even working capital requirements in the absence of fuel selling price not meeting even operating expenses
New Delhi: With oil companies losing Rs333 crore per day on selling fuel below cost, Petroleum minister S Jaipal Reddy has sought a meeting of a high-powered ministerial panel to decide on revising the rates of diesel, domestic LPG and kerosene, reports PTI.
“I have asked for a meeting of the Empowered Group of Ministers (EGoM),” Mr Reddy told reporters after a meeting with finance minister Pranab Mukherjee, who heads the EGoM.
State-owned oil firms are currently losing Rs9.27 per litre of diesel, Rs26.94 per litre of kerosene sold through the public distribution system (PDS) and Rs260.50 per 14.2-kg LPG cylinder supplied to households for cooking purposes.
The EGoM “meeting would take place before the Winter Session of Parliament”, beginning 22nd November, he said, adding that a decision on raising prices may “not be easy”.
The ministerial panel is essentially a consensus-building body of the Congress-led UPA government and comprises key allies like the DMK, TMC and NC. The allies had in September scuttled plans to limit the supply of subsidised LPG cylinders to 4-6 per household in a year so that subsidies can be cut.
Mr Reddy said his ministry would push for raising prices of all three regulated products, diesel, LPG and kerosene.
On oil companies pressing for a hike in petrol prices, he said PSUs were fully empowered to take a view, keeping in mind rising crude oil prices and depreciating rupee.
“Our ministry does not administer” the price of petrol, which was freed from government control in June last year, he said.
Yesterday, HPCL director (finance) B Mukherjee had said that oil firms may have to raise petrol prices, as they were losing Rs1.50 per litre at the current rates.
Mr Reddy said Indian Oil, Hindustan Petroleum and Bharat Petroleum stand to lose over Rs1,30,000 crore this fiscal on selling diesel, domestic LPG and kerosene at rates below their cost.
“Oil companies will soon find it difficult to get loans from Indian banks, let alone foreign banks,” he said, adding that the companies were borrowing heavily to meet even working capital requirements in the absence of fuel selling price not meeting even operating expenses.
Petroleum secretary GC Chaturvedi said oil firms were free to decide on raising rates of deregulated petrol at the right time.
“It is for them (oil companies) to decide. They will take a decision at a right time,” he said.
Mr Chaturvedi said petrol is a deregulated commodity whose pricing is not decided by the government. “The oil companies are empowered to take a view on it,” he said.
Indian Oil, HPCL and Bharat Petroleum had last hiked petrol prices by Rs3.14 a litre on 16th September, when the Indian rupee was valued at about Rs48 per US dollar. The exchange rate is now over Rs49 per US dollar.
“From today, there are some losses on petrol. To cover them, we may have to increase prices,” Mr Mukherjee had said yesterday.
He had stated that crude oil is hovering at around $108 per barrel in international markets. At the current exchange rate, the petrol price of Rs66.84 per litre in Delhi is equivalent to a crude oil price of about $102 a barrel.
“Let’s say, we are toying with the idea,” he said. “It may happen. We will see,” he added.
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