NEW DELHI: Consumers could prepare for shortages in auto and cooking fuel supplies. Oil retailers IOC, HPCL and BPCL have informed the government that if their losses from selling fuel below cost are not adequately compensated, “it may adversely impact the supply-demand balance of petroleum products,” minister of state for petroleum and natural gas RPN Singh told the Rajya Sabha on Tuesday.
Singh said that in the light of the Kirit Parikh committee’s recommendations the government took an ‘in-principle’ decision on June 25, 2010 that diesel price would be made market-determined both at the refinery gate and retail level. “However, in order to insulate the common man from the impact of rise in international oil prices and the domestic inflationary conditions, the government continues to modulate the retail selling prices of diesel, public distribution kerosene and domestic LPG,” the minister said.
Singh said that companies are losing R14.29 per litre of diesel, R31.04 on a litre of kerosene and R570 per cylinder of LPG. In the 2012 fiscal, retailers have incurred a loss of R1,38,406 crore.
The minister also said that although petrol price has been deregulated from June 26, 2010, companies have been making price revisions on petrol “in a guarded manner, at times, absorbing a part of under-recovery themselves”. Companies have also asked the government to cut the excise duty on petrol.
To reduce the burden of higher global oil prices on consumers, the government had in June 2011 removed the 5% customs duty on crude oil and effected a similar duty cut on finished petroleum products. Excise duty on diesel was also cut by R2.60 a litre, leading to a loss of R49,000 crore to the exchequer.