The Hindu : Business : Oil firms seek price revision

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Oil firms seek price revision

Special Correspondent

OMCs facing the heat of unprecedented rise in crude prices

— FILE PHOTO

IN DIRE STRAITS: People refuelling their vehicles from an Assam Oil petrol pump belonging to Indian Oil Corporation in Guwahati.

NEW DELHI: With the international crude oil prices skyrocketing and touching the $126-mark on Friday trading, alarm bells have started ringing in the Petroleum Ministry with oil marketing companies (OMCs) making a strong case for immediate price revision in fuel prices pleading they were on the brink of bankruptcy.

The OMCs have petitioned the Petroleum and Natural Gas Ministry that they are running out of options as the Indian crude basket touched a new high of $118 a barrel and threatening to cross the $120-mark.

Highly placed sources informed that state OMCs are feeling the heat of the unprecedented rise in crude oil prices and some are even contemplating going in for unilateral hike in the price of premium fuels across the country. The OMCs are learnt to have told the Petroleum Ministry that not only the continued ‘high subsidisation’ content was affecting their balance sheets, it could also have an adverse impact on their investment and expansion plans for the future putting a question mark over the issue of securing energy security for the nation.

The oil companies have imported almost 2.3 million tonnes of diesel during 2007-08 against 9.6 lakh tonnes in 2006-07“The under-recoveries have reached such a level that even the one-third sharing formula may not be sustainable in the coming days. It is feared that each stakeholder including the government, upstream companies and OMCs will have to bear a burden of almost Rs. 60,000 to 65,000 crore each if the under-recoveries continue at the same level,” a senior official remarked. The companies are incurring losses of Rs. 4,000 crore on account of under-recoveries. Indian Oil Corporation had exhausted Rs. 35,000 crore of its total borrowing limit of Rs. 50,000 crore.

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