New Delhi, Jan 18 (IANS) A day after petrol prices were hiked by about four percent, Petroleum Minister Murli Deora said Monday that there was no alternative but to do so as the state oil marketing companies were facing huge losses.
"The decision to hike petrol prices was taken by the oil companies. These companies are Navratnas and are making huge losses. These Navratnas cannot be allowed to bleed. They had no alternative but to hike prices," Deora told the CNN-IBN television news channel.
From Jan 16, the three state oil marketing companies - Indian Oil, Bharat Petroleum and Hindustan Petroleum - raised their petrol price Rs.2.50-Rs.2.54 per litre.
Deora said he will meet Finance Minister Pranab Mukherjee Tuesday to ask for abolishing import and excise duties on petroleum products levied in the last budget.
"We are requesting the finance ministry to abolish the import and excise duty on oil and oil products which were levied in the last budget," said Deora.
The ruling United Progressive Alliance's allies, Nationalist Congress Party and Trinamool Congress, have expressed unhappiness that the government did not consult them before increasing petrol prices.
"The allies should be consulted. There should be a coordination mechanism among alliance partners," NCP spokesperson D.P. Tripathi told IANS.
The Trinamool Congress had Sunday expressed concern over the petrol price hike and complained that it was not consulted on the issue. The party had said that a meeting of allies should be held every three months to discuss the ideas of different political parties.
Trinamool Congress MP Sudip Bandopadhyay said the party was holding a protest in Kolkata and other parts of West Bengal Monday against the fuel price hike and consequent rise in prices of other commodities.
However, Deora pointed out that the allies had been part of the government's decision last June to permit oil marketing companies to set the petrol price according to the market conditions.
"(Railway Minister) Mamata Banerjee and TMC were also part of the decision taken for the decontrol of oil prices," he claimed.
The increase comes as the average international crude price has gone up to $100.47 per barrel. The average price of the Indian crude basket has gone up from $87.83 in December 2010 to $92.31 per barrel in January.
Indian Oil said that based on the international price level, the increase in the price for petrol should have been Rs 3.72 per litre.
"However, Indian Oil has chosen to soften the impact on the customer by increasing the price by Rs.2.50 per litre. only and not passing on the balance required increase of Rs.1.22 per litre," the company said.
The state oil refiner added that even the previous increase in December 2010 had left a gap of Rs 1.94 per litre of petrol "in anticipation of a likely fall in the price levels in the global oil market".
There has been no increase in the prices of the other three petroleum products - diesel, kerosene and liquiefied petroleum gas (LPG).
"Based on the current price levels in the international oil market, the retail selling prices (inclusive of tax) of diesel, kerosene and LPG should have been higher by Rs 7.65 per litre, Rs.19.60 per litre and Rs.366.28 per cylinder respectively at New Delhi with corresponding increases across the rest of the country," said an Indian Oil press release.
The total under-recoveries, or losses due to subsidy, of the three oil marketing companies is projected to be as high as Rs 73,600 crore for 2010-11.
"The current increase in the retail selling price (RSP) of petrol was absolutely warranted and necessitated in the context of the above scenario," the release added.