‘Oil companies will decide on petrol price hike’

November 2nd, 2011 - 8:12 pm ICT by IANS  

Pranab Mukherjee New Delhi, Nov 2 (IANS) The government said Wednesdayit was up to state-run oil marketing companies (OMCs) to decide on any petrol price hike, even as Petroleum Minister Jaipal Reddy asked for a meeting of the empowered group of ministers to take a call on the issue.

“It is for them to decide. The oil companies are empowered to take a view on it. They will take a decision ata right time,” Oil Secretary G.C. Chaturvedi told reporters here.

While petrol is deregulated, giving oil marketing firms the freedom to change retail prices, they still require the government’s approval to effect any changes in the prices of diesel, kerosene and cooking gas.

However, increasing petrol prices after a substantial hike of Rs.5 in September would not go down well. The minister too admitted this was a fact, adding that he hoped for a meeting soon on the prices of the regulated fuels.

“I have asked for a meeting of the empowered group of ministers (eGoM). The meeting will take place before the winter session of parliament (beginning Nov 22),” Reddy said.

The eGoM on petroleum is headed by Finance Minister Pranab Mukherjee.

The minister also said that the financial capacity of the oil retailers should not be overestimated. He said their revenue losses because of selling petroleum products below the market price is expected to be around Rs.130,000 crore for this fiscal.

“Oil companies will soon find it difficult to get loans from Indian banks, let alone foreign banks,” he added.

The development comes, a day after one of the OMCs said it was considering a hike in petrol prices given the high crude oil prices and depreciating value of the rupee against the dollar.

“We are at present losing Rs.1.50 per litre on petrol. To make up for this loss a desired increase in retail price should be at least Rs.1.82 a litre,” B. Mukherjee, director-finance, Hindustan Petroleum Corporation Limited (HPCL) had said Tuesday.

“We are in discussion with other oil companies on raising prices. We are toying with the idea,” he added.

International prices of crude were hovering around $108 per barrel, while the rupee had depreciated from 46.50 a dollar three months ago to over 49 per dollar now which has resulted in an increase in the cost of oil imports.

HPCL has posted a net loss of Rs.3,364 crore Tuesday, while its peer Bharat Petroleum Corp (BPCL) earlier reported a second quarter net loss of Rs 3,229.27 crore.

The average cost of the Indian basket of crude went up to $108.73 per barrel, rising from $103.63 a barrel Oct 1-16.

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