|Petroleum minister Murli Deora (right) in New Delhi on Tuesday. Picture by Prem Singh
New Delhi, Nov. 13: The government today ruled out a hike in oil prices until international crude prices stabilise.
“The objective of this government is not to burden the common man. Let prices stabilise, we will take a call. I do not think there is a need for a price hike right now,” petroleum minister Murli Deora said at the Economic Editors’ conference here.
Deora said international crude prices, which had crossed $98 a barrel, were now coming down. Crude was selling at $94 a barrel, he added.
As Indian oil companies consider the average of oil prices over a period of time while fixing domestic prices, the oil ministry feels the prices can be fixed only after watching the oil price movement a little longer.
However, many believe the government’s decision to defer the price hike is more out of political reasons rather than economic ones.
As assembly polls in Gujarat and Himachal are only weeks away and the Winter Session of Parliament is scheduled to begin later this week, the government appears to be adopting a wait-and-watch approach.
The losses incurred by the oil marketing companies have risen to Rs 68,640 crore for this fiscal from Rs 55,000 crore when the government decided to issue oil bonds to bail them out on October 4.
With international oil prices close to $100 per barrel, under-recoveries can only go up further, Deora said. He said oil companies such as the IOC and HPCL were bearing 25 per cent of the losses for selling fuel at cheaper rates. However, he added, “They can manage the losses.”
Officials said the losses could be managed by floating new oil bonds and reducing duties on petroleum products.
The government has not raised retail prices of fuel this year even though crude prices have jumped to record highs.
The price of the Indian basket of crude has risen 145 per cent since April 2004, but retail prices of petrol have gone up by just 29 per cent and diesel by 40 per cent.
To insulate the economy against volatility in global oil prices, Deora said, “We are consulting colleagues in other ministries, including the finance ministry, for an early, workable solution to the problem.”
The minister said the rupee’s appreciation had partly neutralised the impact of rising crude prices.
Deora said 60 blocks may be offered for exploration and production under NELP VII. He said it would comprise 30 onshore blocks, 15 shallow water blocks and 15 deep water blocks.
Civil aviation minister Praful Patel met Deora today to seek a relief of Rs 1,000 crore as the rising prices of aviation turbine fuel were hitting the aviation industry.
“We briefed the petroleum minister on how to safeguard the aviation industry’s interests by rationalising ATF prices,” Patel said.
“The (petroleum) ministry has assured us of all possible efforts in this direction though there is no immediate decision,” he added.