In a bid to bring some respite to the bleeding oil marketing companies (OMCs), the empowered group of ministers (EGoM) headed by Finance Minister Pranab Mukherjee will meet today to review the diesel and domestic LPG prices.
The meet could lead to a diesel price hike which was last revised a year ago while the oil ministry has also made case for increase in domestic LPG price. LPG price was also revised a year ago by Rs 35 per cylinder and diesel by Rs 2. The EGoM was first supposed to meet on May 11, immediately after the end of Assembly elections in West Bengal. However, it got deferred.
Earlier this month oil minister S Jaipal Reddy met Mukherjee and Prime Minister Manmohan Singh to discuss the financial condition of the OMCs. The OMCs-Indian Oil, Bharat Petroleum and Hindustan petroleum, which purchase crude oil at market rates, are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices, resulting in losses.
| PRICE WISE | |||
| Product | Price as on 25-Jun-10 | On June 23, 2011 | Per cent change |
| Diesel | 41.98/litre | 42.06/litre | 0.19 |
| Kerosene | 12.27/litre | 12.27/litre | Nil |
| Domestic LPG | 348.45/cylinder | 348.45/cyinder | Nil |
| Basket of Indian Crude | $72/barrel | $108/barrel | 50 |
| Under- recoveries | Rs 18,000 crore for Q1,FY11 | Rs 45,000 crore for Q1,FY12 (estimated) | 150 |
| Prices in Rs FOR Mumbai Source-Indian Oil, PPAC | |||
The companies currently incur an under-recovery or revenue loss of Rs 13.72 on every litre of diesel, Rs 26.16 on every litre of kerosene and Rs 381 for every LPG cylinder. This translates into a daily loss of Rs 456 crore that could lead to a record annual loss of Rs 166,440 crore in the current fiscal. For the current quarter alone, the OMCs are estimated to incur a loss of Rs 45,000 crore compared to Rs 18,000 crore in corresponding quarter of last year. The rising loss has forced the companies to borrow heavily.
The last increase in prices of these three products was taken in June last year when crude was ruling around $72 per barrel. The current price for Indian basket of crude is around $108 per barrel. In June 2010, diesel price was hiked by Rs 2 per litre, kerosene by Rs 3 per litre and LPG by Rs 35.
