Murli Deora Union petroleum minister

Mumbai, Jan. 10: Union petroleum minister Murli Deora today said the Centre is considering a further cut in petrol and diesel prices in addition to a reduction in LPG rates.

Deora said while petrol prices could be brought down by Rs 5 per litre, diesel could turn cheaper by Rs 3 per litre and LPG cylinder prices could be brought down by Rs 25 per cylinder.

“We have talked to the Prime Minister, in the coming days we are trying to reduce the prices of petrol, diesel and LPG ... give us 10 -15 days,” he told reporters today.

Responding to a query on the extent of such a cut, Deora said in his view, the advisable reduction would be Rs 5 per litre for petrol, Rs 3 per litre for diesel and Rs 25 on LPG cylinder.

Deora said losses accruing to oil companies on account of high crude prices earlier had come down as the crucial feedstock is much cheaper now. Crude oil prices have come down to $40 per barrel from a high of $147 a barrel in July last year.

“From this quarter onwards, we expect the oil marketing companies to start making profits. But, if the crude price rises beyond $40 dollar barrel, then it (profit) will not happen,” Deora added.

When asked about a reduction in kerosene prices, he said it was already available at the cheapest rate in India of Rs 9 per litre.

Deora’s comments are seen as an attempt to pacify agitating truckers who have been off the roads since Monday. The All India Motor Transport Congress representing agitating truckers has demanded a reduction in prices of diesel by Rs 10 a litre apart from a uniform value-added tax.

On December 5, the government had reduced prices of petrol and diesel by Rs 5 and Rs 2 per litre, respectively, as global crude prices hovered around a four-year low.

In Delhi, petrol became about 10 per cent cheaper at around Rs 45.6 a litre and diesel around 6 per cent less at Rs 33.86 per litre. Prices of cooking gas and kerosene, however, remained unchanged.

The cut in December was part of a larger stimulus package to recharge the economy.

However, at that time, the government’s move to review the fuel rates was criticised by the BJP, which accused the Congress of violating the election code of conduct.

HPCL profit

State-run Hindustan Petroleum is likely to make a profit from fuel sales in the January-March quarter, if the global crude prices stay at present levels, a top official said today.

“At the current price level, we are making money (on fuel sales). If this remains, there are chances that we will make profits in this quarter,” Hindustan Petroleum chairman and managing director Arun Balakrishnan said.

HPCL had suffered a loss of Rs 3,218.92 crore in the second quarter of 2008-09, while the loss was Rs 888.12 crore in the first quarter. These losses were on account of selling fuel at subsidised rates.

Even though the government had raised fuel prices in June, the hike could not make up for the under-recoveries against the spiral in global crude prices at $147 in July.

In June, the government had raised the prices of petrol and diesel by Rs 5 and Rs 3 a litre, respectively, while an LPG cylinder became dearer by Rs 50

Asked if the global slowdown had affected the demand for petroleum products, Balakrishnan said, “There is some effect globally, but in India, petrol demand has increased by 10-12 per cent, while demand for diesel has gone up by 3 per cent.”

HPCL accounts for 25 per cent of the petroleum products market in the country.

The refiner had stayed out of a three-day long strike by officers of oil companies.