State-Owned Oil Firms Consider Petrol Price Hike Despite Recent Increase

Strategic Insights -

State-owned oil companies in India are likely to raise petrol prices, just two weeks after a price hike of up to Rs 5 per liter was implemented to offset losses from selling fuel below cost. The move comes despite the recent increase, with oil ministry officials indicating that the government may reduce cash compensation to the oil firms in the 2011-12 fiscal year. The hike could be implemented along with a price increase for diesel, which will be considered by the empowered group of ministers on June 9.

Key Takeaways:

  • Oil ministry officials have met to discuss a potential hike in petrol prices, which could be implemented along with a diesel price hike.
  • The hike aims to offset losses from selling fuel below cost, with oil firms still losing Rs 4.58 on a liter of petrol after the May 14 hike.
  • Indian Oil Corporation (IOC) Chairman R.S. Butola stated that the firm would take a decision on hiking petrol prices at an appropriate time.
  • The average price of the Indian basket of crude for fiscal 2011-12 is expected to be around $121.90 per barrel, up from $113.09 per barrel last fiscal.
  • IOC, BPCL, and HPCL lose about Rs 16.17 on every liter of diesel they sell, Rs 28.28 a liter on kerosene, and Rs 329.73 per domestic LPG cylinder.
  • The three firms will lose Rs 180,208 crore in revenues on selling diesel, domestic LPG, and kerosene below their imported cost in the 2011-12 fiscal year.
  • IOC's net profit in the January-March quarter dropped 29.7% to Rs 3,905.16 crore due to increased fuel subsidy sharing and losses from selling fuel at government-controlled rates.
  • ONGC's net profit fell 26% to Rs 2,791 crore in the same quarter due to the highest ever fuel subsidy of Rs 24,892 crore.

Statistics:

  • Oil firms lose Rs 4.58 on a liter of petrol after the May 14 hike.
  • IOC, BPCL, and HPCL lose about Rs 16.17 on every liter of diesel they sell.
  • The average price of the Indian basket of crude for fiscal 2011-12 is expected to be around $121.90 per barrel.
  • IOC, BPCL, and HPCL will lose Rs 180,208 crore in revenues on selling diesel, domestic LPG, and kerosene below their imported cost in the 2011-12 fiscal year.
  • IOC's net profit in the January-March quarter stood at Rs 3,905.16 crore, down 29.7% from the previous year.
  • ONGC's net profit fell 26% to Rs 2,791 crore in the same quarter due to the highest ever fuel subsidy of Rs 24,892 crore.

Sources:

  • ABP Private Limited, distributed by Contify.com
  • Indian Oil Corporation (IOC)
  • Bharat Petroleum Corporation Limited (BPCL)
  • Hindustan Petroleum Corporation Limited (HPCL)
  • Oil and Natural Gas Corporation (ONGC)