The basket of Indian crude oil touched an all-time high of $75.37 a barrel on Tuesday, widening the losses public sector oil firms suffer on sale of petrol, diesel, domestic LPG and kerosene at prices below the cost.
"Petroleum Ministry has moved a Cabinet note for raising fuel prices but a decision will depend on what allies of the ruling alliance say," an official said.
Allies like RJD had voiced opposition against raising petrol and diesel prices and that may be the apparent reason why the ministry has not mentioned about the hike sought.
Currently, petrol is being sold at a loss of Rs 2.79 per litre while diesel is priced Rs 4.65 a litre below the cost. Oil companies suffer a loss of Rs 15.50 on sale of every litre of kerosene and Rs 178.15 on sale of every LPG cylinder.
State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum will together lose Rs 52,452 crore (Rs 524.52 billion) in revenues this fiscal year if fuel prices are not raised in line with cost.
The Petroleum Ministry has projected a revenue loss of Rs 16,120 crore (Rs 161.20 billion) on kerosene, Rs 11,088 crore (Rs 110.88 billion) on domestic LPG, Rs 6,682 crore (Rs 66.82 billion) on petrol and Rs 18,562 crore (Rs 185.62 billion) on diesel in 2007-08.
A hike of one rupee per litre in petrol price would give Rs 607 crore (Rs 6.07 billion) additional revenue during the remaining seven months of the fiscal.
A similar increase in diesel and kerosene would generate Rs 2,479 crore (Rs 24.79 billion) and Rs 659 crore (Rs 6.59 billion) respectively. A Rs 10 per cylinder hike in LPG prices would add Rs 403 crore (Rs 4.03 billion).
Officials said the Ministry has suggested the government bear half of the remaining under-realisation after the hike through subsidy and oil bonds, while the balance would be met from upstream firms like ONGC.
Last fiscal, the government issued oil bonds worth Rs 24,121 crore (Rs 241.21 billion) to IOC, BPCL and HPCL to cover for almost half of the net under-realisation on sale of petrol, diesel, LPG and kerosene.
The gross revenue under-realisation in 2006-07 was projected at Rs 56,506 crore (Rs 565.06 billion), which got reduced to Rs 49,387 crore (Rs 493.87 billion) after a Rs 4 a litre hike in petrol and Rs 2 per litre increase in diesel prices. Of the net under-realisation, upstream companies like ONGC bore Rs 20,507 crore (Rs 205.07 billion).
Officials said the three refining-cum-retailing firms have committed investment of Rs 15,729 crore (Rs 157.29 billion) this fiscal and the same may be impacted in absence of a price hike. IOC plans to invest Rs 6,952 crore (Rs 69.52 billion), BPCL Rs 3,547 crore (Rs 35.47 billion) and HPCL Rs 5,230 crore (Rs 52.30 billion).