Indian refiners ask government to revert to regulating gasoline prices

India’s state-owned refiners have asked the government to once again regulate the price of gasoline. In June 2010, the government decided to deregulate gasoline but still required oil companies to secure permission before raising prices. But the government has been refusing to allow the state-owned refiners to increase prices leaving the refiners with no other option than to absorb losses incurred by selling gasoline at below market rates. With the deregulation of gasoline, the government is no longer obliged to compensate the refiners for their losses. “Gasoline is not under regulation right now. But under-recoveries are very high and we will not be able to absorb the losses,” said R.S Butola, chairman of India’s largest state-owned refiner, Indian Oil Corporation (IOC). The company said it has incurred losses amounting to Rs 20 billion (US$400 million) from selling gasoline at prices that were less than the market rates during the current financial year which ends on March 31, 2012. “We have asked for 100% reimbursement. If we are not given this, we will have to consider passing on the burden to consumers,” Butola said. But the government does not seem to be keen in reverting to regulating gasoline because it would mean a higher subsidy burden. In the current financial year ending March 31, the total revenue loss on selling gasoil, LPG and kerosene is estimated to reach more than Rs 1.4 trillion (US$28 billion). “Oil companies have no doubt suggested some measures. As of now we are not contemplating regulation,” said Oil Minister S. Jaipal Reddy. (March 27, 2012)