Petroleum minister Murli Deora said he would shortly submit a comprehensive plan before the Cabinet to deal with the impact of volatile global crude oil prices on domestic fuel prices. Hinting at a fuel price cut after the assembly elections are over on December 24, Deora said on the sidelines of the India-CIS rountable on energy, ?A long term solution is what is the need of the hour. Whether domestic fuel prices be made market determined or otherwise will be spelled out by the petroleum ministry in its proposal to the Cabinet.?
Deora agreed that with the fall in international prices, there is an expectation that prices need to be reduced. ?I am also of the opinion that they should be reduced but we have to look at other issues such as dealing with the huge losses posted by the oil PSUs in the wake of high oil prices during ,? Deora said.
The three oil marketing companies posted combined losses of Rs 14,000 crore in the first half of the fiscal. While the fall in international oil prices have brought down the estimated revenue loss on fuel sales this fiscal, the under-recoveries at current global crude oil prices are still estimated to be a whopping Rs 1,10,000 crores. Interestingly, the former petroleum minister Ram Naik has issued a ticklish statement where he has criticized the UPA government?s decision for cutting the prices of aviation turbine fuel (ATF) alone without touching the petrol and diesel prices untouched. Stating that India is the only country where ATF is cheaper than petrol, Ram Naik said, ? ATF is sold at Rs 40 per litre to the airlines, whereas petrol which is consumed by the common man, costs Rs 57 per litre. This is the eighth wonder of the world. In no other country will you find that ATF is cheaper than petrol.?
State-run firms Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, have resisted moves to cut fuel prices, arguing they need to make up for losses incurred earlier as crude rates soared. The three state-run oil marketing companies are currently earning positive margins on the sales of petrol and diesel. Based on the average international oil prices in the first fortnight of November, the margins stand at Rs 16 crore per day on petrol and Rs 5 crore a day on diesel. However, they continue to lose on kerosene sold through ration shops and domestic LPG. Kerosene is being sold at a loss of Rs 22.40 a litre and LPG at Rs 343.49 per cylinder.
Petroleum secretary R S Pandey said the ministry would go to the Cabinet Committee on Economic Affairs with a comprehensive proposal highlighting the situation and the remedial steps that can be taken.