Financial Daily from THE HINDU group of publications
Wednesday, Jun 16, 2004
Industry & Economy - Petroleum
Government - Policy
Petrol dearer by Rs 2, LPG Rs 20 Diesel price up Re 1; kerosene untouched
The Minister for Petroleum and Natural Gas, Mr Mani Shankar Aiyar, addressing a press conference on oil pricing in the Capital on Tuesday. _ Ramesh Sharma
New Delhi , June 15
THE public sector oil marketing companies on Tuesday announced an average increase in the retail price of petrol by Rs 2 per litre, diesel by Re 1 per litre and that of LPG by Rs 20 per cylinder effective midnight tonight.
The Government-approved price hike is still not good enough to restore the commerciality of the companies, which have lost Rs 5,000 crore in the last three months due to non-revision of retail prices in the wake of global crude price shocks.
"These price adjustments are our immediate response to the global price shocks. We are working on a package of measures to devise a more enduring mechanism," the Petroleum Minister, Mr Mani Shankar Aiyar, told newspersons.
The global crude price has spurted $7 per barrel in the last five months during which domestic petrol and diesel prices have not been raised. In the case of kerosene and LPG, no hikes have been undertaken in the last two-and-a-half years.
On its part, to help mitigate the losses incurred by the companies, the Government has agreed to a reduction in excise duties on products. The excise duty on petrol has been reduced by four percentage points to 26 per cent; on diesel by three percentage points to 11 per cent; and that on LPG from 16 per cent to 8 per cent.
The customs duties on crude or petro-products have not been altered, hence not impinging on the refining margins of the refiners.
A back of the envelope calculation reveals that if the global crude price continues to reign at the current levels of $35 per barrel, the oil marketing companies will lose around Rs 13,500 crore during fiscal 2004-05. This assumes today's price hikes as well as the excise duty reduction effected by the Finance Ministry.
The price hikes will leave the consumers poorer by Rs 6,000 crore for the entire year while the Ministry of Finance, has sacrificed revenues of around Rs 2,500 crore on an annual basis.
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