Petrol price hike in the offing as crude soars

Consumers may have to bear another round of price hike in auto and cooking fuels as the government is mulling a review in the wake of soaring cost of crude and pressure from state-run oil marketing companies (OMCs) which are incurring heavy losses.

"The perspective of our ministry is that prices of all petroleum products need to be looked at again," Petroleum Minister Jaipal S Reddy told reporters in Delhi on Friday.

But the minister was quick to point that fuel price hike was a sensitive issue. The United Progressive Alliance's partner, the Trinamoool Congress, and opposition parties are likely to oppose an increase in prices.

"However, we are living in a real world, not only in the world of numbers. For those decisions I will have to go to the meeting of empowered group of ministers," said Reddy.

Indian Oil, Bharat Petroleum and Hindustan Petroleum have asked the government for about Rs4,500 crore on account of petrol alone as they were unable to revise prices since December.

At that time the price of Brent crude, which is a benchmark for deciding domestic retail rates was at $109 per barrel. On Thursday it was up 17% at $123.31 a barrel in London for May delivery.

Selling subsidised diesel, kerosene and cooking gas, all of which are still regulated fuels have also been bleeding the OMCs.

The biggest OMC, Indian Oil Corp, said the question of a price hike and its quauntum would depend on the government reimbursing the firms for losses.

"Since we have requested the government and if the government is to make us on the whole by reimbursing hundred percent of under recoveries then there may not be a case," said Indian Oil chairman RS Butola.

Asked for how long they were willing to wait, he said: "Normally the experience from the past has been that ... may be towards the end of March or by the time we close our books."

Reddy also clarified that India would continue to import crude from Iran.

Although Japan and 10 European nations have been exempted by the US from financial sanctions, which it levies on purchase of Iranian crude, India and China still face the risk of such action.

"We have a systematic plan for receiving oil from Iran. Our companies need oil from Iran and we will continue to do that without violating international law," said the minister.