As per suggestions by public sector oil retailers, the government may be forced to raise prices of petrol by Rs. 8 in coming days. Since December 01, 2011, the retail price of the fuel stayed at Rs. 65.64, while its under-recovery stands at Rs. 7.17 per litre. According to sources, the industry wants to increase the price to make up for the losses accrued over the last few months.
Oil retailers have not taken any decision on price hikes for the past four months due to fears regarding the political aftermath of such a move. They have been biding their time in order to hike the price as the Finance Bill is expected to get Rajya Sabha's approval in a few days and the Parliament session is expected to conclude by May 22, 2012.
According to an industry expert, there are mixed reactions on the timing of the hike, since there are two options, either raise prices after the Finance Bill has been passed or after the Parliamentary session is completed. However, there are huge chances for this hike to come into effect in a couple of days since there is no threat of the government being ousted now. The government has no control over petrol's price, even though it is a deregulated product.
RPN Singh, Minister of State, Petroleum and Gas, told Rajya Sabha that public sector retailers have not hiked prices since December 01, 2011 despite a sharp increase in prices of petroleum products worldwide. India's public sector retailers include Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
In order to recover the losses that they suffered over the past 5 months, these companies have suggested that the government should declare petrol as a 'regulated' product temporarily. They also want the national government to facilitate 100 per cent cash compensation or lower the taxes on the fuel from Rs. 14.78. It is said that the new excise duty should be equal to the under-recovery on petrol. The issue of hike in prices has been put in front of the Finance Ministry by Petroleum Ministry.
Retailers continue to incur losses on regulated petroleum products. The under-recoveries on diesel, kerosene and domestic LPG are Rs. 14 per litre, 31.49 per litre and 500 per cylinder. State governments have also been asked by Petroleum Ministry to reduce tax and levies on CNG and LPG to bring down retail prices. Through taxes and duties on the products, dividend to the government and income tax, the petroleum sector paid a total of Rs. 1,36,497 crores to the Central Exchequer. For April-December 2012, it has been estimated to be Rs. 84,404 crores.
