India considers urgent steps to help fuel retailers

India is considering several options to help its state-owned oil majors absorb mounting losses on retail sales of transport and cooking fuels due to government-set price caps that remain in place despite soaring international crude markets, Oil and Gas Minister Murli Deora said May 22. State-run retailers Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are facing a liquidity crunch as they are required to retail gasoline, gasoil, kerosene and LPG at government-set prices that are below production cost. The government last allowed the retailers to raise gasoline and gasoil prices in February, but prices for kerosene have not been increased since 2002 and for LPG since 2004. Furthermore, the gasoline and gasoil price increases were not proportionate to the rise in global crude markets in 2007, and crude prices have continued to soar since then, gaining around 40% so far in 2008. Meanwhile, Hindustan Petroleum Corporation Limited is in talks with bankers to raise its borrowing limit beyond Rupees 220 billion (US$5.13 billion), a senior company official said May 22. (May 27, 2008)