Petrol prices hiked by Rs 3 per litre
The price hike will come into effect from midnight tonight.
"Oil retailers are losing Rs 2.61 per litre or Rs 15 crore per day on sale of petrol. Together with local taxes, the hike needed to level domestic rates with international prices is about Rs 3 per litre," a top government official said.
IOC, BPCL and HPCL have lost Rs 2,450 crore this fiscal on selling petrol -- whose rates were freed from government control in June last year -- below the cost.
"At current rate, oil firms will accrue another Rs 2,850 crore of loss on sale of petrol, taking the total loss on a fuel that was freed from control, to Rs 5,300 crore for the full fiscal," the official said.
Besides petrol, the three firms are losing Rs 263 crore per day on selling diesel, domestic LPG and kerosene below cost. Diesel is being sold at a subsidy of Rs 6.05 a litre, kerosene at Rs 23.25 per litre while domestic LPG rates are under-priced by Rs 267 per 14.2-kg cylinder.
"The industry lost around Rs 65,000 crore in the first half of the current fiscal on the three products and for the full year the revenue loss is estimated at Rs 121,571 crore at the price of Indian basket at USD 110 per barrel," said the official.
Rupee fell to 48 per dollar today for the first time since September 2009. "Every rupee depreciation, the under-recovery (revenue loss) increases annually by around Rs 9,000 crore," he said, underscoring the need for action on the price front on all the three products.
Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) had last raised petrol price by Rs 5 a litre in May. Diesel, domestic LPG and kerosene price were hiked in June by Rs 3 per litre, Rs 50 per cylinder and Rs 2 per litre.
The government had in June last year decontrolled petrol price but continues to dictate diesel, domestic LPG and kerosene rates. However, petrol price has not moved in tandem with its cost, keeping in mind the government's concerns on inflation which climbed to 9.78 percent in August.
"The losses on the four products have meant that oil companies borrowed to meet even their working capital requirement," the official said.
The combined borrowing levels of the oil marketing companies has increased from Rs 96,700 crore in March 2011 to Rs 120,000 crore in August 2011. "The increase is mostly towards short term borrowings to fund working capital requirements," he said.
The basket of crude oil that India buys had averaged USD 85.09 per barrel in 2010-11. From April-September, it has averaged USD 111.64 per barrel, a 31 percent increase over the last fiscal (2010-11).
The Indian basket of crude oil averaged USD 106.94 per barrel in August and USD 110.88 a barrel in September.