Ups and downs of diesel price in India
>> Tuesday, December 7, 2010
It likely to take a call on deregulating diesel prices before the follow-on public offers of Indian Oil, and Oil and Natural Gas Corporation Ltd hit the market in the last quarter of this fiscal.
State-run IOC, Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) sell diesel at a loss of Rs 4.71 per litre. “It is extremely difficult for the government to pass on the entire burden to the consumers. We will have to go before the empowered group of ministers (eGoM),” oil secretary S. Sundareshan said. On June 25, the eGoM had freed petrol prices and decided to make diesel rates market-determined in due course. The decision resulted in a hike of Rs 3.50 a litre in petrol prices in Delhi. At that time, the government had decided to raise diesel prices by an ad hoc Rs 2 per litre even though the difference between the domestic retail price and the imported cost was almost twice the amount.
"Unfortunately, crude prices have been consistently going up since June," he said. Global crude rates have risen over $10 per barrel to over $85-86 a barrel since June. During April-September, Indian Oil, BPCL and HPCL suffered a loss of Rs 31,367 crore on selling fuel below cost. Compensation by upstream oil companies ONGC and Oil India Ltd of Rs 10,486 crore and a budgetary support of Rs 13,000 crore have met part of the loss. Sundareshan said the budgetary support was less than Rs 15,683.30 crore sought by the oil ministry. For the full fiscal, the three retailers are projected to lose Rs 65,839 crore.
According to analysts, the uncertainty over diesel pricing and the way subsidies are split between firms and the government can deter investors from subscribing to the IOC and ONGC floats.
"Unfortunately, crude prices have been consistently going up since June," he said. Global crude rates have risen over $10 per barrel to over $85-86 a barrel since June. During April-September, Indian Oil, BPCL and HPCL suffered a loss of Rs 31,367 crore on selling fuel below cost. Compensation by upstream oil companies ONGC and Oil India Ltd of Rs 10,486 crore and a budgetary support of Rs 13,000 crore have met part of the loss. Sundareshan said the budgetary support was less than Rs 15,683.30 crore sought by the oil ministry. For the full fiscal, the three retailers are projected to lose Rs 65,839 crore.
According to analysts, the uncertainty over diesel pricing and the way subsidies are split between firms and the government can deter investors from subscribing to the IOC and ONGC floats.
Kazakh deal ONGC Videsh -the foreign arm of ONGC -will acquire a 25 per cent stake in Kazakhstan's Satpayev block in the Caspian Sea by the end of February, Sundareshan said.
Source: http://www.telegraphindia.com
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