The Hindu : Business : Oil companies denied freedom to raise petro product prices

Online edition of India's National Newspaper
Saturday, Aug 26, 2006

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Oil companies denied freedom to raise petro product prices

Staff Reporter

No proposal to merge Chennai Petroleum with IOC

CHENNAI: The national oil marketing companies do not have the freedom to revise the prices of widely consumed petroleum products such as petrol and diesel and on whose retail prices they suffer under-recoveries.

"Where is the freedom [to revise the prices]," asked Indian Oil Corporation Chairman S. Behuria in response to a query on recent reports about the Centre granting freedom to the companies to increase the prices.

To a query from The Hindu on the sidelines of the annual general meeting of Chennai Petroleum Corporation Limited, a group company of IOC, here on Friday, he said even if the companies were to utilise the freedom, the prices would go up marginally. They would be allowed to increase the price of petrol by 50 paise a litre, while the under-recovery on the existing retail price was around Rs.6.

Responding to shareholders' queries at the AGM, Mr. Behuria, who is also the Chairman of CPCL, said the refinery, as part of the package formulated by the Centre, had to share a part of the under-recovery on the retail price of liquefied petroleum gas, kerosene besides the automobile fuels. It did this by offering the products at a discount, totalling Rs. 439 crore, to the companies. This saw its profit after tax dropping to Rs. 481 crore (as against Rs. 597 crore in 2004-05).

"It [discounts] was unavoidable... otherwise consumers had to pay more," he said. To another query, he said there was no proposal to merge CPCL with IOC. The AGM approved the decision of CPCL to declare a dividend of 120 per cent, which includes the 30 per cent interim dividend paid in February.

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