The government on Friday ruled out any major jump in petrol and diesel prices after the elections to cover the rise in the cost of crude prices, but said a review to bring the domestic prices in line with the raw material cost will be done by the new government.
The state-run oil firms have repeatedly written to the oil ministry to raise petrol prices by Rs 3 per litre and diesel prices by Rs 5 per litre in step with the rise in international crude oil prices, which touched a 14-year high this month.
"There will not be any such increase in petrol and diesel prices," Petroleum Secretary B K Chaturvedi told reporters on the sidelines of a conference on natural gas in New Delhi.
International crude oil prices have risen sharply during the last 20-25 days and the trend reflects on India as it imports 70 per cent of its requirement.
"The oil companies are reviewing (the spurt in crude prices) and they will take an appropriate action. The fear of any substantial increase in the prices is false," he said.
During an informal discussion in February, the Cabinet had directed the oil companies to keep on hold all such price hikes till the elections were over, sources said.
Chaturvedi said the cooking gas (LPG) and kerosene prices too would be reviewed by the new government as state subsidy on the two mass-consumed fuel fell way short of the cost. The government had, last year, decided to keep on hold the LPG and kerosene prices till March 31, he added.
LPG prices will have to be raised by Rs 94 a cylinder and kerosene by Rs 4.90 a litre to bring them in line with the cost.
Chaturvedi rubbished the claims of oil companies that they were losing Rs 2,000 crore (Rs 20 billion) a month on selling petrol, diesel, LPG and kerosene below the cost.
"The oil companies, during the first three quarters of 2003-04 fiscal, posted an average 50 per cent increase in their net profits. If they were losing so heavily, then where have these profits come from," he said.
He said the government was not interfering with fixation of fuel prices and that it was the job of the oil companies.
Public sector oil firms, which have not revised petrol and diesel prices since December 31, had reportedly asked for raising petrol prices by Rs 3 per litre and diesel prices by Rs 5 per litre to cover the $4 per barrel increase in crude oil prices.
Indian Oil Corporation, which controls 60 per cent of the retail market, reported a jump of 31 per cent in its net profit to Rs 5,154.88 crore (Rs 51.55 billion) in April-December 2003 over Rs 3,915.24 crore (Rs 39.15 billion) in the same period of the previous fiscal. Bharat Petroleum Corporation Ltd's net profit jumped 59 per cent, from Rs 802.6 crore (Rs 8.03 billion) to Rs 1,280.7 crore (Rs 12.81 billion), while Hindustan Petroleum Corporation Ltd's profit was up 52.3 per cent to Rs 1,376.09 crore (Rs 13.76 billion).
After dismantling the administered pricing mechanism, oil companies were given freedom to revise prices of petrol and diesel every 15 days based on the average of crude oil they bought from the international market during a fortnight.
Prices were also kept on hold ahead of the Assembly elections in Madhya Pradesh, Delhi, Rajasthan and Chhattisgarh. After the elections, prices were raised by Rs 2 per litre in two instalments to compensate the oil firms for their losses.
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