Days of pondering, yet no consensus on oil price hike

Despite days of deliberations, the government has failed to arrive at a consensus on the proposal to hike fuel prices, necessitated by a spike in global crude prices that threatens to spawn an oil import crisis.

A core group of ministers including the external affairs minister Pranab Mukherjee, finance minister P Chidambaram and petroleum minister Murli Deora held inconclusive deliberations on this issue. The meeting was also attended by Planning Commission deputy chairman Montek Singh Ahluwalia.

While Deora evaded the media, sources said there is a possibility that the GoM on fuel prices may meet tomorrow to deliberate on the options before the government to bail out the state owned oil marketing companies from a virtual collapse. IOC has already announced that in the absence of a bail out package, the company will be left with no cash after September end, even to import crude oil. BPCL and HPCL have already stated that they have cash to buy crude oil only till July.

The three firms face huge liquidity crisis as they are unable to realise full value of products sold. The GoM on fuel prices headed by Mukherjee may take a call on the issue before forwarding it to the Cabinet Committee on Economic Affairs (CCEA) for approval.

IOC, BPCL and HPCL are currently lose close to Rs 580 crore per day on sale of petrol, diesel, domestic LPG and kerosene as they have been barred from raising prices in line with rise in cost. Crude prices have more than doubled since February when petrol price was hiked by Rs 2 per litre and diesel by Re one per litre.

?Even after a hike in petrol, diesel and LPG prices, duty cuts, giving retailers oil bonds worth Rs 35,000 crore and upstream firms like ONGC chipping in Rs 30,000 crore, a gap of Rs 51,000 crore is left to be covered,? a senior oil company official said.

Petrol currently attracts Rs 14.35 a litre excise duty and diesel Rs 4.60 per litre. IOC, BPCL and HPCL, at present, are losing Rs 16.34 a litre on petrol, Rs 23.49 per litre on diesel, Rs 305.9 per LPG cylinder and Rs 28.72 per litre on kerosene.