The Hindu : National : IOC seeks steep hike in petrol, diesel prices

Online edition of India's National Newspaper
Friday, Apr 15, 2005

National

National

IOC seeks steep hike in petrol, diesel prices

Special Correspondent

NEW DELHI: In the wake of rising global crude oil prices and hikes in excise duty, the public sector Indian Oil Corporation (IOC) has urged the Government to allow a rise of Rs. 4.59 per litre and Rs. 5.18 per litre on petrol and diesel prices respectively. This will also cover the extra costs due to higher road development cess and improving the quality of fuel to Euro III levels.

Profitability eroded

According to the IOC chairman, Sarthak Behuria, the proposal has been submitted to the Government for consideration in view of the huge losses affecting the company's bottomline as a result of freeze in petroleum product prices since November last. Though the company will not go into the red during 2004-05, Mr. Behuria said the extent of profitability has been substantially eroded as a result of under-realisation on sales of diesel, petrol, kerosene and LPG. It has been able to remain profitable largely due to higher refining margins.

He told reporters on Wednesday that the Indian basket of crude oils has nearly reached $50 per barrel. As a result of these record world oil prices, the company has suffered losses of Rs. 6565 crores on kerosene and LPG sales, and under recovery of about Rs. 1100 crores on petrol and diesel sales during 2004-5. Even in the first fortnight of April, Mr. Behuria said, the company has already incurred under-realisation of Rs. 300 crores on petrol and diesel with net losses on kerosene and LPG estimated at Rs. 356 crores.

In contrast, the under-recoveries were much lower at Rs. 2352 crores during 2003-4..

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