India also to raise fuel prices sooner or later

As global crude prices shot to a record 135 dollar a barrel increasing import cost of state-run oil companies, Prime Minister Manmohan Singh on Thursday said the government would not let them suffer.
"We will not allow oil companies to suffer," he told reporters at the fourth anniversary celebrations of the UPA government at his residence.
Indian Oil, Hindustan Petroleum and Bharat Petroleum lose close to Rs 600 crore per day on sale of petrol, diesel, LPG and kerosene and in a few months would be left with no money to import crude oil and products, a scenario that may see auto and cooking fuel shortages in the country.
Petroleum Minister Murli Deora is due to meet heads of the three firms and then take them along to meet the Prime Minister to explain that the whopping Rs 200,000 crore under-realisation on fuel sales projected for the fiscal was unbearable and the government needs to act fast.
The Union Cabinet may be convened if Prime Minister agrees for a price rise, sources said, adding that a hike in the range of Rs 2 to 5 a litre was being suggested.
Deora on his part did not deny or confirm if price hike was on agenda. "We are discussing all possible measures to help and protect our public sector oil companies... some remedial measures need to be taken (urgently)," he said.
The three firms are losing Rs 16.34 a litre on petrol, Rs 23.49 per litre on diesel, Rs 305.90 per LPG cylinder and Rs 28.72 per litre on kerosene.
The three firms are faced with a huge liquidity crunch and are borrowing Rs 3,500 crore a month to meet day-to-day expenditure. With borrowings touching Rs 65,000 crore, the companies are now talking to banks to raise borrowing limit, said S Sundereshan, Additional Secretary in the Ministry.

Courtesy: THE HINDU

US blames India,China for Oil Price Hike

White House has pointed a finger at India and China for the spike in oil prices even as it sought to clarify president George W Bush’s remark about Indian middle class contributing to rising food costs. A presidential spokesperson on Monday also stuck to its guns on bio-fuels asserting that US policy of promoting corn-based ethanol in motor fuel supplies was having only a “small impact” on world food prices.

“I would point out that obviously the demand for oil is growing around the world,” spokesperson Scott Stanzel told reporters when asked to comment on oil price hitting a record $120 a barrel Monday. “Many developing nations like India or China are having greatly increased demand, which obviously is having an impact on price,” he said.

Asked to clarify Mr Bush’s remark last week that growing prosperity of India’s large middle class is contributing to rising food prices around the world, Mr Stanzel said: “I can certainly clarify that. We think it is a good thing that countries are developing, that more and more people have higher and higher standards of living.”


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