By IANS
New Delhi : Torn between spiralling global oil prices and political opposition to raising transport and cooking fuel prices, the Indian government is likely to take a call on the issue next week, according to the petroleum minister.
“I cannot say 100 percent, but we will try to resolve it next week,” Petroleum Minister Murli Deora told reporters on the sidelines of the India-Africa Hydrocarbon Conference here Wednesday.
“The government is very much alive to the problems. We are trying our best to resolve this problem as early as possible,” he said, adding: “We are considering various alternatives, including duty restructuring and increase in prices.”
The government has been in a dilemma on how to deal with a situation where oil majors are facing losses of over Rs.2 billion ($50 million) daily, but the ruling alliance feels a price hike will be politically damaging.
It had approved bonds to cover 42.7 percent of the under-recoveries of oil marketing firms, which was about Rs.550 billion ($14 million) when the decision was taken last week.
However, global oil prices have surged further since then and were hovering around $97 per barrel Wednesday.
Since the revised losses are now projected at Rs.700 billion, petroleum secretary M.S. Srinivasan indicated that the government would issue more oil bonds to keep pace with it. The revised share for the government would come to nearly Rs.300 billion.
The government’s Left allies and chief opposition Bharatiya Janata Party are already prepared to criticise any fuel price hike.
Indian Oil Corp chairman Sarthak Behuria said his company’s under-recoveries of Rs.1.22 billion daily has a “tremendous impact on liquidity”.
“At current prices, our borrowings will top Rs.30 billion per month,” he said.
The Indian basket of crude was selling at $89 a barrel Wednesday, with the monthly average for Nov hovering around $78.
Hindustan Petroleum Corp Ltd chairman Arun Balakrishnan has suggested that prices of petrol and diesel should be increased by Rs.4-5 per litre, kerosene by Rs.17-18 per litre and LPG by Rs.200 per cylinder.
“Duty cuts would also help,” he told reporters.
Balakrishnan pointed out that companies with more refining capacity and less marketing were relatively less affected by record global prices.