Fuel prices may be cut before LS polls

The government may further reduce petrol, diesel and domestic LPG prices just before the general elections are announced in February, a senior official said.

"To my mind, the government will wait till February before making another round of price cuts," a senior Petroleum Ministry official said.

Earlier this month, the government reduced petrol price by Rs 5 a litre and diesel by Rs 2 per litre as international crude oil prices dipped from an all-time high of $147 a barrel in July to under $45 a barrel.

"This period (till February) will be used to monitor the movements in international prices. There is no point in cutting fuel prices just now and then having to raise it again if oil makes a retreat," the official said.

Even after this months price cut, public sector oil firms were making a profit of Rs 9.98 on sale of every litre of petrol and Rs 1.03 per litre on diesel. The further softening in global oil prices has seen these profits widen to Rs 11.48 per litre on petrol and Rs 2.92 a litre on diesel, he said.

However, the oil companies continue to lose Rs 17.26 per litre on PDS kerosene and Rs 148.38 per domestic LPG cylinder.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are together projected to lose Rs 1,10,381 crore in revenues this fiscal on fuel sales, the official said, adding the oil firms can use the period till the next price cut to make up part of the losses they have incurred on fuel sales this fiscal.

The three firms had posted a combined net losses of Rs 14,431 crore during the first six months of 2008-09.