PSU OMCs firm up after diesel price hike

Indian Oil Corporation (up 1.40%), HPCL (up 0.58%) and BPCL (up 0.42%), edged higher.

The BSE Sensex was down 4.29 points, or 0.02% at 19,573.10.

Public sector oil marketing companies (PSU OMCs) suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.

PSU OMCs raised petrol price by Rs 1.82 a litre, excluding local sales tax or VAT, with effect from midnight of Friday, 28 June 2013.

Meanwhile, the Minister of Petroleum & Natural Gas Dr. M. Veerappa Moily directed PSU OMCs, at a meeting of CMDs and Directors (marketing) of PSU OMCs and Indian Sugar Mills Association (ISMA) on Monday, 1 July 2013, to make all efforts for expediting delivery of already procured quantity of ethanol. Moily also asked PSU OMCs to expeditiously procure additional quantity of ethanol through fresh tenders to meet the requirement of 5% mandatory Ethanol Blended Petrol (EBP) programme. Moily had called the meeting of PSU OMCs and ISMA to expedite procurement and the delivery of ethanol for the EBP programme as per Cabinet Committee on Economic Affairs (CCEA) decision taken in a meeting held on 22 November 2012.

The minister observed that against a requirement of 100 crore litres ethanol per year, PSU OMCs have so far finalized procurement of around 40 crore litres of ethanol for next twelve months. To meet the balance requirement, PSU OMCs are planning to float another tender in the month of July 2013 for procurement of ethanol. During the meeting, ISMA suggested that OMCs could procure the finalized quantity of 40 crore liters entirely in the next 3-4 months and fresh fender may be floated for the requirement of ethanol coinciding with next sugar season which starts from October 2013. The supply from new tender could be from the month of November 2013.

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