Oil prices slump but Govt says no fuel price cut

New Delhi: The Government on Monday ruled out reducing petrol and diesel prices though international oil prices have slumped.

"Where is the scope for reducing prices? Oil companies are still making losses," Petroleum Minister Murli Deora told reporters here.

State oil companies Indian Oil, Bharat Petroleum and Hindustan Petroleum are making losses worth Rs 400 crore every day compared to Rs 450 crore a fortnight back.

"Oil companies continue to lose money on sale of petrol, diesel, (domestic) LPG and kerosene. There has not been so much reduction in global prices to warrant a price cut," Petroleum Secretary R S Pandey said.

The basket of crude oil India buys averaged $111.09 a barrel in the second fortnight of August as compared with $117.37 per barrel in the first fortnight of the month. Based on an average price of the second fortnight of August, retailers are losing Rs 6.31 per litre on petrol, Rs 13.69 on diesel, Rs 31.39 on kerosene and Rs 312.58 per 14.2-kg LPG cylinder. Till last week, they were losing Rs 7.07 per litre on petrol, Rs 16.22 on diesel, Rs 39.55 on kerosene and Rs 348.89 per LPG cylinder.

The three firms are now projected to lose Rs 165,300 crore in full 2008-09 fiscal, down from Rs 184,801 crore projections of last week. A month back the losses were projected at Rs 205,740 crore.

Pandey said the revenue loss of retailers would be fully compensated, through a combination of oil bonds and assistance from upstream firms like ONGC.

The Indian basket of crude oil averaged $ 113.12 per barrel in August, down from $ 121-122 a barrel average price when the June 4 hike in petrol, diesel and domestic LPG prices was announced.

IOC, the company that controls about 54 per cent of the market, is projected to lose Rs 90,630 crore on fuel sales this fiscal.

The company loses Rs 11 crore per day on sale of petrol, Rs 112 crore daily on sale of diesel, Rs 63 crore per day on kerosene and Rs 32 crore per day on LPG.

Fuel prices in India are pegged at $ 68 per barrel; much lower than $ 112.19 a barrel price on Friday.