India in discussions over fuel prices

India’s ministerial panel on fuels, headed by Finance Minister Pranab Mukherjee, will be discussing the effects of the rupee’s fall against the dollar and the recent trends in the international oil market in late November. Following demands for increases in the retail prices of motor and cooking fuels, Oil Minister S Jaipal Reddy said that there is currently no proposal to raise prices. “But, to take a decision on diesel, cooking gas, kerosene is not an easy affair,” he said.

India’s oil retailers incurring loses

The Indian government has maintained that companies are free to revise petrol prices, but so far, they have waited upon the decision of the oil ministry because the government has the biggest market share in the country. The last time they raised prices was on September 16. Many of the oil marketers are losing about Rs 1.50 (US$0.02 ) on petrol, excluding taxes, and the government subsidies have been slow in coming. On the other hand, Reddy said that state-run fuel retailers will incur sales losses exceeding Rs1.3 trillion (US$24.5 billion) in the current financial year through March as a result of selling diesel fuel and cooking fuels at subsidized rates set by the government. Meanwhile, Oil Secretary G.C. Chaturvedi said that the oil ministry had asked the finance ministry for an additional Rs280 billion (US$5.2 billion) in cash compensation. The money will help retailers wipe off their sales losses incurred for six months till September, as a result of selling cooking fuel and diesel fuel at discounted rates. Chaturvedi said the ministry had already pledged Rs150 million (US$2.8 million) as cash subsidy for retailers for losses incurred during the April-June quarter, but the money has not yet been released. (November 3, 2011)