India: Oil prices may rise after presidential election

NEW DELHI: With the end of presidential poll in sight on Thursday and international crude oil price hitting the $78/barrel-mark, the oil ministry is once again crunching numbers for raising motor fuel prices although overarching economic concerns of re-igniting an upward trend in the inflation rate remain.

The calculations envisage an increase in the region of Rs 2-2.50 a litre in petrol and Re 1-1.50 a litre in diesel, aimed at checking mounting losses of state-owned oilmarketing firms as the mix of crude imported by India heads above $70/barrel. Based on data supplied by the public sector oil firms, petrol and diesel prices are required to be raised by over Rs 5 a litre to bring them in tune with international crude prices.
Last heard, the oil firms were losing over Rs 5.3 a litre on petrol and Rs 4.40 on diesel as the crude mix bought by India has gone up 12% since February 15, when petrol and diesel prices were slashed by Rs 2 and Re 1 a litre, respectively. Besides, oil companies are also losing Rs 14.67 a litre on kerosene and Rs 167 on each cylinder of cooking gas.

As per the equitable burden-sharing formula, if and when the ministry gets the Cabinet nod for raising prices, the over Rs 5 a litre burden is going to be borne by the consumers who will pay more; the government which will issue bonds or tweak taxes; and the oil companies such as ONGC who will contribute from their income from crude and gas sales to cover the losses.

Economic Times