FM admits consumers not getting full benefit of lower crude prices

Jaitley said the Indian oil companies were in losses despite the price cuts and it was not unfair to let them recover some of these losses.

The government on Thursday admitted that it was not passing the entire benefit of international oil price cuts to consumers in order to let the oil marketing companies “compensate” for their “inventory losses”.

Speaking in the Rajya Sabha, finance minister Arun Jaitley said the government had cut the retail prices of petrol and diesel 11 times in the last few months, but it was true that the lowering of prices within the country were not entirely commensurate with the reduction of international prices.

Jaitley said the Indian oil companies were in losses despite the price cuts and it was not unfair to let them recover some of these losses.

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“Oil has a very complicated economy. No one appreciates that even as the prices have gone down, the oil companies are still running losses of about Rs 30,000 crore. This is because they placed the order when the price was, say, 80 dollars a barrel, but by the time they procured it the prices had gone down. These are companies in which the government has a majority stake, but there are private shareholders as well.

These are listed companies. Are we going to destroy these companies? Shouldn’t these companies factor in some part of the reduction in oil prices to cover up for this inventory loss?” Jaitley asked.