PM stresses need for fuel price rejig

Bhatinda, April 29:2012

Prime Minister Manmohan Singh today said prices of petroleum products in the country needed to be rationalised as spiralling global crude prices were putting pressure on the oil import bill of the country.



"With imports accounting for about 80 per cent of our oil supplies, the spiralling prices of crude in the international market have put a severe strain on our import bill. We need to rationalise prices and at the same time ensure that the poor are shielded from the effects of such a rationalisation," he said at the inauguration of a refinery here.



The Guru Gobind Singh Refinery at Phulkori, Bhatinda, has been built at a cost of $4 billion. The refinery has been built by HPCL-Mittal Energy Ltd.



Though the government had decontrolled petrol price in June 2010, PSU oil firms did not get a free hand in tweaking rates because of political pressure. For example, the current petrol price of Rs 65.64 a litre in Delhi is about Rs 9 short of its cost.



The government controls rates of diesel, domestic LPG and kerosene. Oil retailers sell diesel at a discount of Rs 16.16 a litre, while they lose Rs 32.59 on every litre of kerosene. A 14.2-kg domestic LPG cylinder costs Rs 570.50 less than its actual cost.



"In order to insulate the common man from the impact of rising oil prices, the government shoulders a sizeable portion of the burden by pricing diesel, kerosene and domestic LPG below their market prices," he said.



State-owned oil companies have not raised diesel, domestic LPG and kerosene for almost a year despite cost of raw material rising by a quarter.



The three state-owned firms have lost around Rs 138,800 crore in revenues on selling diesel, domestic LPG and kerosene below cost in 2011-12, which is estimated to increase to Rs 208,000 crore in the current fiscal.



The Prime Minister said the country faced formidable challenges on the energy front and needed adequate supplies at affordable prices. Domestic sources of crude oil and gas are inadequate to meet the growing demands of the country's rapidly expanding economy.



He said the 9-million-tonne-a-year Guru Gobind Singh Refinery was built at a total investment of Rs 21,000 crore and was an example of what the public and the private sectors could achieve in partnership with each other.



"We have sufficient refining capacity to enable us to export petroleum products," the Prime Minister said.



The refinery in Bhatinda is likely to further boost the petroleum exports from the country, including Pakistan.



Pakistan has allowed the import of fuels, including petrol and diesel, from India after removing non-tariff barriers on November 2. The distance between Bhatinda and Lahore is about 100 miles.



Lakshmi N. Mittal said the capacity of his first downstream oil venture here would be doubled to 18 million tonnes in the future.



He said the 9-million-tonne-a-year unit would help in energy security of the country and make Punjab a petrochemical hub.



HPCL chairman S. Roy Choudhury said the company had not yet finalised an agreement on fuel exports to Pakistan.



He said the firm was in talks with Kuwait and Saudi Arabia for a long-term fuel supply contract for the refinery.



HPCL and Mittal Energy Investment Pte Ltd, Singapore, a Lakshmi Mittal Group company, hold 49 per cent stake each in HEML, while 2 per cent is held by financial institutions.


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