Government will roll back the Rs 4 a litre hike in petrol prices and Rs 2 a litre increase in diesel rates if international crude oil prices stabilize between $50 and 60 a barrel, Oil Minister Murli Deora said.
"Yes, we will cut prices if crude prices stabilise for sometime between $50 and 60 per barrel," he said in New Delhi. The Government had last week raised petrol and diesel prices citing spike in international crude oil prices to $70 a barrel.
International rates have eased since. The basket of crude oil India buys was at $61.58 a barrel on Wednesday but the average for July was $65.34 per barrel. The July average was certainly lower than $69.12 a barrel average price of Indian basket of crude for June.
Deora said the price rise was unavoidable as India was dependent on imported crude oil to meet 75 per cent of its domestic oil needs. Indian Oil, Bharat Petroleum and Hindustan Petroleum were projected to lose Rs 4,870 crore in revenues every month on selling petrol, diesel, domestic LPG and kerosene below the cost.
"To cover this (revenue loss), the retail prices were required to be increased by Rs 6.94 per litre on petrol, Rs 4.11 a litre on diesel, Rs 96.68 per LPG cylinder and Rs 16.01 per litre on kerosene," Deora said. "However, the Government increased the price of petrol only by Rs 4 per litre and of diesel by Rs 2 a litre."
The price hike had been necessitated as international prices of crude oil had jumped 75 per cent – from $40 a barrel in December to $70 per barrel.
The monthly revenue loss on sale of petrol and diesel came to Rs 2,800 crore and urgent cash flows were needed to keep the capital expenditure plans on track, Deora said.
The price increase will reduce the revenue losses by about Rs 13,000 crore during 2009-10. "Even after this increase, oil PSUs are projected to suffer a burden of around Rs 27,000 crore on the sale of petrol and diesel," he said.
Deora said the Government has not increased the retail price of kerosene and diesel and a projected Rs 30,000 crore subsidy burden would have to be borne by the Government on this account.
He said since 2003-04, the Government has issued oil bonds worth Rs 142,203 crore to oil marketing companies IOC, BPCL and HPCL to keep retail selling prices below the international rates.
Upstream firms like ONGC contributed another Rs 101,285 crore while the three retailers absorbed Rs 55,734 crore of losses instead of passing the rise in crude oil prices to consumers.