Petroleum and oil marketing companies raised the price of commercial liquid petroleum gas (LPG) cylinders by Rs 350.50 per unit and domestic LPG cylinders by Rs 50 per unit with immediate effect from Wednesday.
The government has directed state-run fuel retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum to clear the wait list for domestic LPG connection within the next two months.
Losses on sale of diesel at government-controlled rates have hit a record Rs 19.26 a litre, sending state-owned oil companies scrambling for ways to cover the mounting losses.
The average price of Indian basket of crude oil during 2007-08 (upto August) has increased to $68.34 per barrel as compared to 62.46 dollars a barrel during 2006-07.
Profits of the country's oil marketing companies - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - fell by as much as 29 per cent in 2007-08 in spite of an up to 56 per cent rise in the oil bonds these companies received during the year compared with 2006-07.
"Air India is unable to pay even after a 90-day credit period. They owe us about Rs 300 crore without interest. There is also no bank guarantee from Air India to any of the oil marketing companies. We do not know when will the company honour its dues," said a BPCL official on condition of anonymity.
This is to compensate for their under-recoveries on the sale of petroleum products during the current financial year. Indian Oil Corporation has been issued oil bonds worth Rs 5,817.27 crore, while Bharat Petroleum Corporation has been issued bonds worth Rs 2,144.32 crore. Hindustan Petroleum Corporation has got bonds worth Rs 2,038.41 crore. Prior to this, bonds worth Rs 60,967 crore had already been issued.
The Supreme Court on Monday issued notices to Hindustan Petroleum Corporation Limited and the Union government, taking note of a news item that said the diesel sold in the national capital region was being adulterated.
A higher government borrowing will 'crowd-out' the private borrowing and push interest rates higher.
Indian Oil Corporation (IOC), Bharat Petroleum and Hindustan Petroleum may post a combined loss of Rs 10,700 crore in June quarter on selling petrol and diesel at rates below cost, a report said on Monday. While the raw material (crude oil) prices soared in April-June, petrol and diesel prices were not revised, leading to marketing losses which offset strong refining margins, ICICI Securities said in the report. The three state-owned oil marketing companies -- IOC, BPCL and HPCL -- control 90 per cent of the retail petrol and diesel sales in the country.
The limited availability of flexible (flex)-fuel vehicles in the Indian market and the slow rollout of ethanol-blended petrol by oil-marketing companies (OMCs) remain major obstacles to achieving widespread use of biofuels in the transportation sector in India. Recently, two Union ministers have emphasised India's biofuel potential, arguing that it has the capacity and potential to lead a transition towards widespread biofuel adoption. Road Transport Minister Nitin Gadkari signalled that this transition is well underway and urged car manufacturers to quickly adapt and introduce new biofuel-run vehicles, lest the government resort to taxing diesel vehicles.
Several members of Parliament have opposed privatisation of public sector oil firms like IOC and have asked the government not to seek a review of the Supreme Court verdict halting privatisation of HPCL and BPCL, Petroleum Minister Ram Naik said.
Public sector oil marketing company Indian Oil Corporation (IOC) will raise prices of petrol by 27 paise a litre, - for the first time since decontrolling petrol prices.
Getting compensated for at least 90 per cent of losses without government subsidy appears difficult.
Over 100 chemical storage tanks built at the Pirpav jetty near Chembur have been operating without approvals from the ministry of environment and forests for over 18 years. Each of these tanks has an average capacity of 200,000 kilolitres of oil.
Vijay Mallya-owned Kingfisher Airlines owes state-run oil companies over Rs 950 crore (Rs 9.50 billion0 in unpaid fuel bills while financial crisis-hit NACIL has cleared almost two-thirds of its outstanding.
OMCs losing Rs 20 crore daily on sales, 18 months after prices were deregulated.
The Union oil ministry is considering a proposal to adopt differential pricing for diesel, under which industrial users like power utilities, will be charged market prices and retail consumers continue to be subsidised.
Petrol prices were freed from government control last month, resulting in a Rs 3.50 per litre rate hike in Delhi.
State-run Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently sell petrol, a commodity which the government freed from its control in June last year, at a discount of about Rs 4.50 a litre to its imported cost.
IOC and its sister PSUs, Hindustan Petroleum and Bharat Petroleum, sell diesel, domestic LPG and kerosene at rates way lower than their imported cost to help government keep general price inflation under check.
Kaushik Basu, chief economic advisor in the finance ministry, said, "All I can say is, we are very serious about fiscal consolidation, and intend holding on to our fiscal targets, even if the crude price rises on a sustained basis."
Petrol price in Delhi was hiked to Rs 77.28 per litre from Rs 76.73, while diesel rates were increased to Rs 75.79 a litre from Rs 75.19, according to a price notification from State oil marketing companies. Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or VAT.
State-owned fuel retailers, which last week raised petrol price by Rs 1.80 per litre, reported a net loss of over Rs 8,000 crore (Rs 80 billion) in July-September quarter and are borrowing heavily to even buy crude oil.
While Indian Oil Corporation will get the highest Rs 5,817.27 crore (Rs 58.17 billion) of special bonds, Bharat Petroleum Corporation Ltd will receive Rs 2,144.32-crore (Rs 21.44 billion) bonds and Hindustan Petroleum Corporation Ltd will be issued bonds worth Rs 2,038.41 crore (Rs 20.38 billion). The bonds will carry an 8 per cent coupon rate and will mature in 2026, the government said in a statement.
With the new Bharat Stage IV emission norms coming into effect from Thursday, oil companies are gearing up to meet the requirements of Mumbai, an official said on Friday.
A series of rises in petrol price following its decontrol on June 25 last year has increased the state governments' earnings from value added tax on petrol by around 21 per cent.
It is in talks with a local player for a discovered asset so that it can have a ready cash flow in one or two years.
The petroleum ministry has sought additional oil bonds worth about Rs 13,000 crore (Rs 130 billion) to cover the revenue loss on fuel sale in the fourth quarter of the current fiscal.
IOC and other state retailers had on September 16 raised jet fuel price by 2.5 per cent.
The gvernment said on Tuesday that contingency plans have been drawn to maintain continuous supply of petroleum products if the employees of privatisation bound Hindustan Petroleum Corporation Ltd go on strike.\n\n\n\n
Higher crude oil prices have almost doubled the under-recoveries of government-owned oil marketing companies -- Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum -- in the past three years.
The government on Wednesday said there was no proposal to either merge Hindustan Petroleum and Bharat Petroleum with Oil and Natural Gas Corp or Oil India Ltd with Indian Oil Corporation.
Despite raising petrol prices by around Rs 2.95 a litre - the second-biggest increase in this calendar year so far - public and private retailers are losing Rs 50 crore a day on selling the auto fuel.
The bonds will help oil marketing companies - IOC, HPCl, Bharat Petroleum and IBP Ltd - to cover their under-recoveries.
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