Oil companies to bear Rs.121,571 crore under-recoveries: Reddy

October 19th, 2011 - 11:56 pm ICT by IANS  

New Delhi, Oct 19 (IANS) State-owned oil marketing companies (OMCs) will bear under-recoveries of Rs.121,571 crore in 2011-12, despite the recent petrol price hike, Petroleum Minister S. Jaipal Reddy said Wednesday.

“The under-recoveries of the OMCs for the year 2011-12 are now projected to be Rs.121,571 crore, at an average price of the Indian basket of crude oil at $110 per barrel during the year,” Reddy said in his adress at the Economic Editors’ Conference.

According to Reddy, upstream companies like ONGC will continue to share the burden of under-recoveries with OMCs.

The OMCs have been given considerable autonomy to decide on pricing in accordance with the current international crude oil prices scenario, he added.

“Oil companies are at present free to take suitable decisions on pricing of petrol on the basis of international oil prices, market conditions and commercial considerations,” Reddy stated.

“The decline in prices of petrol and crude oil in international market is offset with the depreciation of rupee.

“Even after the implementation of market determined pricing, the public sector OMCs have been making price revisions of petrol in a guarded manner, absorbing a part of the under-recovery themselves,” he said.

The government has taken certain steps like removal of five percent custom duty on petroleum products and reduction of excise duty on diesel, he added.

Earlier, the government had increased diesel prices by Rs.3 per litre, kerosene by Rs.2 per litre and domestic LPG by Rs.50 per cylinder.

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