OMCs to up petrol prices,diesel may see small hike

“Considering the severe winter in Europe and the festive demand,there is apprehension that crude price will remain high or it may even go up. Consumers have to be prepared to share a part of the burden,” Sundareshan told reporters. Sundareshan said the government should take a view on a possible diesel price increase “as quickly as possible” considering the fact that oil marketing companies cannot sustain the huge losses from subsidising fuel and that crude price is not showing any signs of abating. The decision rests with the cabinet committee on prices chaired by Prime Minister Manmohan Singh. The secretary,however,declined to speculate on the quantum of a price increase in diesel. Crude oil price touched $90 a barrel on Tuesday for the first time in more than two years.

Due to the high crude prices,the government is not in a position to de-regulate the price of diesel now. “Diesel price deregulation means passing on the entire burden to the consumer,which I think,is impossible now because it would mean a sudden increase in the consumer price of the fuel,” Sundareshan said. The way out is to share the burden among the government,upstream companies like ONGC,Gail India and Oil India and a small share by fuel retailers. A small part of the burden from higher crude price will have to be borne by the consumer,he added.

The government has estimated that this year,the subsidy requirement for the oil sector could rise up to Rs 65,000 crore. So far,the loss arising from selling diesel,LPG and kerosene at government fixed prices has touched Rs 31,367 crore. Of this,the finance ministry has agreed to pay a subsidy of Rs 13,000 crore,while upstream companies have paid Rs 10,456 crore by way of discounts to refiner-cum-retailers. Fuel retailers have borne the remaining loss of Rs 7,911 crore.