"It (price increase) is very essential but (before hiking rates) we have to talk to political parties," he told reporters in Amritsar on the way to Ashgabat for signing of the agreement for the Turkmenistan-Afghanistan-Pakistan-India pipeline.
The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar.
Price of diesel, kerosene and cooking gas were raised in June last year. "If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually)," Reddy said.
"Rupee on Monday dipped (to an all-time low of) Rs 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs 72,000 crore (on account of rupee depreciation) this year."
"Seeing all this, something needs to be done, but when will it be done, how it will be done... I cannot make a forecast," Reddy said. "There is no decision on raising price or not raising prices".
State-owned oil firms, who had in the fiscal ending March 31, 2012 lost Rs 4,860 crore on petrol sales, are currently losing Rs 6.28 per litre on petrol. After including 20 per cent VAT, the desired increase in petrol price in Delhi comes to Rs 7.53 a litre.
"The three oil marketing companies (Indian Oil, Hindustan Petroleum and Bharat Petroleum) together have lost about Rs 2,650 crore in the first two months of current year," an official of IOC said.
Petrol price were last revised on December 1 when they were cut by Rs 0.65 a litre to Rs 65.64 in Delhi. Price of gasoline in the international market, against which the domestic rates are benchmarked against, was $109.03 a barrel at that time.
Today they are around USD 125 per barrel. The rupee had averaged 51.50 to a US dollar. Today is it over 55 to a US dollar.
The losses on petrol are besides Rs 512 crore per day that oil firms lose on selling diesel, domestic LPG and kerosene. Diesel is currently sold at a loss of Rs 15.35 a litre, kerosene at Rs 32.98 per litre loss and oil firms lose Rs 479 on sale of every 14.2-kg domestic LPG cylinder.
The three firms had together lost Rs 138,541 crore in revenue in 2011-12. This year they are projected to lose a record Rs 193,880 crore.
With government not allowing oil firms to raise fuel prices due to political considerations, the state-owned companies have demanded that petrol be made a regulated product temporarily and losses on it be made good through cash subsidy support from the exchequer.
Alternatively, excise duty on petrol of Rs 14.78 a litre should be reduced by an amount equivalent to the current loss on the fuel sale. Simultaneously, states should also reduce the rates of Sales Tax, which vary from 15 per cent to 33 per cent (Rs 10.30 to Rs 18.74 per litre).