Need to rationalise petroleum prices: PM

The government’s dilemma over fuel prices again came to the fore, with Prime Minister Manmohan Singh today indicating the need to “rationalise’ prices while shielding the poor.

Government-controlled oil marketing firms have not been allowed to raise prices of cooking fuels and diesel since June 2011 and, since the beginning of this year, have also been asked to keep any hike in petrol prices on hold. In a largely political speech, delivered in Punjabi, at the inauguration of the Bathinda refinery, Singh brought out the government’s concern over subsidy. “In order to insulate the common man from the impact of rising oil prices, the government shoulders a sizeable portion of the burden by pricing diesel, kerosene and domestic LPG below their market rates,” he said while stressing on the need to curb inefficient and wasteful fuel usage.

At present, oil marketing companies sell diesel, kerosene and domestic LPG at revenue loss of Rs 15 per litre, Rs 32 a litre and Rs 550 per cylinder, respectively. In 2011-12 financial year, the gross revenue loss of the three government oil companies from these three products stood at Rs 140,000 crore.

“The challenges we face on the energy front are formidable. We need adequate supplies at affordable prices. Domestic sources of crude oil and gas are inadequate to meet the growing demand of our expanding economy,” Singh said. Government-controlled Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum lost about Rs 138,800 crore in revenues on selling diesel, domestic LPG and kerosene below market prices in 2011-12. The cumulative revenue loss this financial is estimated at Rs 208,000 crore.

In his address, Petroleum Minister S Jaipal Reddy said, with a population of 1.2 billion and an economy that is growing on an average of 8 per cent a year, India’s energy needs are increasing at a rapid rate. “The challenge is more pronounced since we are highly dependent on imported oil, which accounts for 75 per cent of our total requirement,” he said, adding that the country’s oil import bill had already breached the $100-billion mark in 2010-11.

“Meeting the requirements of India’s expanding economy is creating a tremendous surge in the demand for hydrocarbons,” he said. Fuel demand has risen from 129 mt in 2007-08 to 147 mt in 2011-12 at an annual growth rate of 4.2 per cent.