Petroleum Minister Murli Deora on Thursday ruled out an immediate reduction in petrol, diesel and domestic LPG prices saying the international oil prices haven't fallen so much to warrant a rate cut.
"I welcome fall in oil prices. We are watching the situation very carefully and hope there is further reduction so that we can think (of a price reduction)," he told reporters.
A price reduction may be considered if crude oil falls to $61 per barrel, he said. The basket of crude oil India buys was at this year's lowest of $68.81 per barrel.
"There is no case for downward revision in prices now," Petroleum Secretary R S Pandey said.
Indian Oil, Bharat Petroleum and Hindustan Petroleum are currently losing about Rs 280 crore (Rs 2.8 billion) per day on sale of petrol, diesel, domestic LPG and kerosene as government has not allowed them to align retail prices with cost of production.
Oil firms were supposed to break-even on fuel sales if the price of Indian basket of crude oil comes down to $67 per barrel.
However, with 20 per cent depreciation in value of rupee against the dollar, the break-even point is now atUSD 61 a barrel, Pandey said.
They are losing Rs 2.85 a litre on petrol, Rs 7.26 on diesel, Rs 29.19 on kerosene and Rs 335.03 per LPG cylinder and are projected to lose Rs 1,47,592 crore (Rs 1,475.92 billion) in revenues this fiscal.
The Indian basket of crude oil, which was at $129 per barrel at the time of June price revision, has averaged at $78.06 per barrel in October.
It stood at $96.81 a barrel.
Pandey said the recent depreciation of rupee - from Rs 40 to a dollar to Rs 48 per dollar currently, has partly offset the benefit of softening of the international oil prices.
The domestic retail prices at the time of revision in prices in June were equivalent to Indian basket of crude oil of $66 per barrel.
With the recent depreciation of rupee against dollar, the current retail prices now correspond to $61 per barrel of Indian basket of crude oil.
Officials said the three fuel retailers were borrowing heavily for financing their working capital and capital expenditure requirements.
The combined borrowings of the three, which stood at Rs 48,400 crore (Rs 484 billion) in March 2007 and Rs 66,900 crore (Rs 669 billion) in March 2008, has increased to Rs 1,10,000 crore (Rs 1,100 billion) as of October.
The oil firms' credit limits have recently been enhanced by Rs 14,000 crore (Rs 140 billion) to enable them to meet their fund requirements till the end of October.
The interest burden of the three companies during 2008-09 is expected to go up by Rs 4,200 crore (Rs 42 billion), compared with previous year due to increase in borrowings and higher rate of interest, they said.
