Govt rules out immediate cut in fuel prices

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New Delhi, Sep 5: Global oil prices may have fallen $35 a barrel in past few weeks but consumers in India will have to wait for the rates to fall further for a fuel price cut as even at current levels, oil firms are losing huge money.

“We will consider a price reduction (when) international oil prices fall further,” petroleum minister Murli Deora said. State-run Indian Oil, Hindustan Petroleum and Bharat Petroleum are still losing about Rs 400 crore per day on sale of petrol, diesel, domestic LPG and kerosene despite oil coming off its peak of $147 per barrel to about $112.

Deora said the government is considering dual pricing for diesel. “Oil companies are projected to lose about Rs 100,000 crore on diesel sales this year as the subsidised fuel is being increasingly used in industries for power generation.”

The minister also asked why should people who travel in luxury cars be sold subsidised diesel. State-run firms have proposed to the petroleum ministry that diesel for industries and big cars be sold at Rs 57 per litre instead of Rs 34.80 a litre being sold now at petrol pumps. “We are considering dual pricing but it is very difficult to implement,” Deora said.

The Railways for one, which currently gets diesel at subsidised rates, may revolt if prices are raised. Also, monitoring petrol pumps that sell market-priced diesel to big cars will be difficult. The time has not yet arrived for discussing cuts in retail fuel prices, Deora said.

The drop in international oil prices has resulted in revenue loss of Indian Oil, Bharat Petroleum and Hindustan Petroleum dip to Rs 400 crore per day from Rs 450 crore a fortnight back.

Retailers currently lose Rs 6.31 per litre on petrol, Rs 13.69 on diesel, Rs 31.39 on kerosene and Rs 312.58 per 14.2-kg LPG cylinder. The three firms are now projected to lose Rs 165,300 crore in fiscal 2008-09, down from Rs 184,801 crore projections of last week. A month back, the losses were projected at Rs 205,740 crore.