The public sector oil marketing giants like Indian Oil Corporation and Bharat Petroleum Corporation Ltd lost between Rs 1,500 and Rs 1,800 crore (Rs 15 and 18 billion) because they were not allowed to hike prices in January when international crude oil prices shot up.
However, the fall of international prices in the last fortnight has eased the financial pressure on the oil giants.
Benchmark Brent crude prices averaged $29.87 a barrel in December 2003 but jumped to $31.23 a barrel in January 2004. The average Brent price this month has fallen to $30.43.
In theory the oil companies are allowed to hike the prices of petrol and diesel but in practice the petroleum ministry's interference in the price fixation has continued even after the administered pricing mechanism in the oil sector was dismantled on April 1, 2002.
Even as the international oil prices continued to harden during January, the PSUs weren't able to raise the domestic prices of the two automobile fuels because of the forthcoming general elections.
The oil PSUs last raised petrol and diesel prices by Re 1 a litre on December 31, 2003. The prices have not been raised ever since though the international oil prices hardened during January 2004.
According to industry experts, this spurt in the international prices in one month should have translated into a Re 1.50 a litre increase in the prices of the two automobile fuels.
With the Organisation of Petroleum Exporting Countries announcing a production-cut recently, it was thought that international crude oil prices would continue to rule high.
However, with a number of OPEC members ignoring the directive, and inventory position in the US witnessing a marked improvement, crude prices have been ruling around $30.50 a barrel.
