Petrolium price may be burned after election
It is ending the last phase of state elections and very happy news for the oil marketing companies that government is planning to hike petroleum prices. Petrol, diesel and cooking gas prices will be increased. According to the market experts, the hike in the petrol prices will be by Rs 4/Litre, Diesel Rs 5/Litre and cooking gas Rs 70/ cylinder. It will be the first revision of petrol prices after December 2011. Degulation process was postponed by the state elections in these days. It is clear that the Brent crude in December was near $ 110 and now it is near $125. Iran tension is the main reason of this hazardous situation. According to Oil industry, there was a loss of Rs 900 Cr after the revision in Dec 2011. The subsidy bill is near Rs 1500000 Cr.
There are sleepless nights for the finance minister. A petrol price hike after election will be enough to have a good sleep for the minister. Diesel prices may be hiked before the parliamentary sessions. According to the oil marketing companies, they are losing Rs 13/litre on diesel, Rs 30/litre on kerosene and Rs 340/ cylinder for domestic cooking gas. As far as the public sector oil marketing companies like Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are concerned, daily loss is Rs 410 Cr by the sale of diesel, domestic LPG and kerosene.
Since there is deregulation, petroleum companies can hike the petrol prices at any time. In case of Diesel and LPG, they must get the approval from Empowered Group of Ministers. Opposition from Mamata Banerjee is expected. Mamata is not ready for any compromise in the fuel price hike.
A credible signal regarding to the fiscal consolidation is expected in the coming budget. Sluggish revenue and high expenditure is the specialty of Indian economy. The government allows to hike petrol prices without touching diesel. Rs 67000 Cr is the diesel subsidy. Car owners and captive power generators are the beneficiaries of government’s diesel subsidy. The cost of crude oil is not only depended on international oil prices but also the forex rates of rupee. It is not the first time that the government asked petroleum companies to put hold the hike decision. The same thing was happened before ten months. Government postponed the hike plans in May 2012 due to the elections in four states. It was hiked within 48 hours of the completion of election.