New Delhi, Sept 25: The government has calculated that state-run oil companies have spent some Rs 4,000 crore extra during April-September 2002 on importing petro-products because of the sharp volatility in the global markets.
The oil companies have together spent Rs 39,000 crore on importing 40 million tonnes of crude compared with Rs 35,000 crore in importing the same quantity during the first half of last year.
Petroleum minister Ram Naik told reporters here today that he would be discussing demands for a cut in duties on petro-good imports to make it viable for oil companies to keep hikes in domestic prices at levels lower than global spikes.
News of impending US backed invasion of Iraq has already driven global crude prices to over $ 31 a barrel, compared with an average price of just over $ 27 last month. Today, the US benchmark crude oil futures slipped 37 cents to $ 30.40 a barrel, still close to its highest level since February 2001 after a rally of $ 1.50 the last week.
For every $ 1 rise in crude prices, rise in retail price, unless absorbed by subsidy or changes in tax rate, works out to 64 paise a litre for petrol and 58 paise a litre for diesel.
Last week, public sector petroleum companies had announced an increase in the retail price of petrol and diesel. While petrol prices were hiked by up to 50 paise per litre, diesel prices went up by about 40 paise. Even after the last round of price hikes, domestic petrol prices were up to Rs 1 a litre short of the import parity price, while diesel’s current domestic price is 67 paise short of import parity.
Oil companies have done so because of pressure from the petroleum ministry, which has been informally dictating to them that they should absorb some notional losses till the finance ministry takes a decision on duty rates in October. The ministry even wants the PSU oil firms to permanently absorb some notional losses so that prices do not rise beyond a certain point.
The minister said he expected finance minister Jaswant Singh to support his demand. However, finance ministry officials said the best Singh would agree to would be to cut duty to the extent of keeping total earnings from duty at a constant level.
Naik also said he had also lobbied with Opec to try get them to charge lower prices from Asian countries and had got China, Korea and Japan to support him on the issue.
Currently, the US and EU nations buy crude at rates which are a $1 to $1.50 lower per barrel compared with India and other Asian nations simply because they lift larger quantities. “Opec has promised to look into the matter,” the minister said.