Oil companies have threatened to raise oil prices if the government does not compensate them for the losses incurred. They have asked the government to allow them to increase the price of petrol by Rs 8.04 per litre (excluding state levies) with immediate effect.
As per oil companies they are suffering losses to the tune of Rs 2,287 crore which have now become unsustainable. If the situation persists, it will impede the ability of the companies to import crude oil and may affect product supply-demand balance.
Indian Oil, which is India's biggest fuel retailer by volume, has stated that state-run refiners cannot sustain a scenario where they import crude oil at $121.29 per barrel and sell at $109.03 per barrel. It is of the view that the government should temporarily regulate petrol prices and pay them the 100% compensation or reduce the excise duty on petrol from Rs14.78/litre by an amount equivalent to the under-recoveries on petrol and simultaneously advise the states to reduce the rates of sales tax, which vary from 15% to 33%. The RBI too in its recent credit policy has spoken in favour of increasing oil prices.
The outburst is a reminder of the fact that petrol prices continue to be controlled by the government inspite of them being officially deregulated. In the month of November-December, crude oil prices shot up to $125 per barrel but the oil companies were not allowed to raise prices in tandem because of the crucial assembly elections. Petrol prices were last revised on December 1 and have remained unchanged from December 16 to March 31.
Indian Oil is also seeking an increase in prices of the three fuels (diesel, kerosene, LPG) sold at subsidized rates as in 2012-13. The combined revenue losses of refiners on such sales could surge to Rs 2.04 trillion from Rs 1.39 trillion a year ago, against which full compensation is yet to be received.
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