Fuel retailers threaten to raise petrol prices

NEW DELHI Tue Apr 17, 2012 6:10pm IST

A worker holds a fuel nozzle at a petrol pump in Mumbai June 11, 2010. REUTERS/Danish Siddiqui/Files

A worker holds a fuel nozzle at a petrol pump in Mumbai June 11, 2010.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - Fuel retailers have threatened to hike petrol prices by about 15 percent if the government does not temporarily regulate prices and compensate them for losses on sales, further evidence the liberalised market really remains under New Delhi's control.

The Reserve Bank of India (RBI) in its policy review on Tuesday also advocated raising gasoline 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.

India freed pricing of gasoline in June 2010 but continues to subsidise prices of gasoil, kerosene and cooking gas to protect the poor from the impact of any inflation pressures.

In the second half of 2011, oil companies began reflecting market realit ies more closely and raised local gasoline prices but they stopped from end-November on the request of the government -- their majority shareholder -- ahead of elections in some states. Petrol prices were last revised on Dec 1.

State-refiners -- Indian Oil Corp (IOC.NS), Bharat Petroleum (BPCL.NS) and Hindustan Petroleum (HPCL.NS) -- have suffered revenue losses of 22.87 billion rupees because they haven't changed gasoline prices from December 16 to March 31.

In the first fortnight of this fiscal year beginning April 1, the revenue loss on retail sales of gasoline was 7.45 billion rupees, IOC, the country's biggest fuel retailer said in a statement on Tuesday.

IOC said state-run refiners cannot sustain the current scenario where they import crude oil at $121.29 per barrel and sell 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," it said, adding the alternative was to "increase the price of petrol by Rs.8.04 per litre (excluding State levies) with immediate effect."

The refiners have urged the government to lower factory gate tax on gasoline from 14.78 rupees a litre by an amount equivalent to the revenue loss on retail sales and asked state governments to cut local levies, varying from 15 to 33 percent.

IOC is also seeking an increase in prices of the three fuel sold at subsidised rates as in 2012/13 the combined revenue losses of refiners on such sales could surge to 2.04 trillion rupees from 1.39 trillion rupees a year ago, against which full compensation is yet to be received.

(Reporting by Nidhi Verma; Editing by Jo Winterbottom)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Full Article 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage