Richa Mishra
New Delhi, Nov. 13 Whether the winter festive season will bring cheer to buyers of petrol, diesel and cooking fuel only the next fortnight will indicate. The Indian crude basket is expected to be in the range of $48-50 a barrel on Thursday in sync with the dip in global prices. The last time Indian basket had dipped below $50 was in early 2005. This dip has led to the expectation that the Government may consider reducing the prices of auto and cooking fuels. The continued volatility in currency rates and international crude oil prices, however, makes it difficult for the Government to consider a price cut on the retail front at this juncture, sources said. The Prime Minister has also said so. Sustaining margins The Government caps the retail selling price of petrol, diesel, kerosene and LPG. This has led to public sector oil marketing companies (OMCs) incurring a revenue loss of Rs 14,000 crore in the first six months of the current fiscal. However, the under-recovery for the full fiscal is expected to be Rs 1,14,000 crore, from the earlier estimate of Rs 1,28,135 crore. When crude prices were at $147 a barrel, it was estimated that the loss would be Rs 2,50,000 crore. Asked at what crude price the OMCs can sustain profitability, sources told Business Line that if crude remains at $55-57 a barrel range and the rupee appreciates to around Rs 41 and stays there for some time, then perhaps, in December the companies could make marginal profit on sale of all four products. But this still would not be enough to wipe out the losses already booked in the first and second quarter of the fiscal, they said. For the first fortnight of November the companies are expected to make a marginal profit from diesel sale if crude continues at the current level. Currently, the OMCs are incurring a revenue loss on sale of diesel, LPG, and kerosene. They are losing Rs 0.96 a litre on diesel, Rs 22.40 a litre on kerosene and Rs 343.49 a cylinder on LPG. They are making a profit of Rs 4.12 a litre on petrol. The Petroleum Minister, Mr Murli Deora, has reiterated that any cut in domestic retail selling prices would be considered only when the global crude prices and rupee stabilise. Besides, the gains from fall in crude prices have been offset by depreciation of rupee. The OMCs, which are integrated refining-cum-marketing entities, are processing crude that has been bought at $75-80 a barrel, thus leading to inventory losses and a dip in the gross refining margins. ICRA in its July 2008 report had observed that the June 2008 package - of domestic retail price increase on petrol, diesel and, cooking gas, duty cut on petrol and diesel, and increased subsidy burden of upstream companies such as ONGC - has helped reduce the subsidy burden of the oil companies, but market prices are still below the average cost of the procuring companies. It had observed that the continued subsidies on petroleum products have gradually brought the once highly profitability oil industry to the brink of losses. However, the Finance Ministry believes that the refining margins too need to be reviewed. http://www.thehindubusinessline.com/2008/11/14/stories/2008111451650100.htm When prosperity comes, do not use all of it. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
