IOC hints at more fuel price hikes Oil firms may share subsidy burden

Finance ministry is averse to slash excise duty; Union Cabinet to discuss issue today

State-owned oil marketing company Indian Oil Corporation (IOC) on Tuesday indicated that petrol and diesel prices are likely to be continue to be hiked for few more days even if international crude oil price gets stabilised.

“We need to understand that right now our prices are driven by last 15 days average. So if for 15 days international price rise and if after that it does not rise in international market, still we will see the rise (in petrol and diesel prices),” said a senior IOC official.

However, the Modi-government is under tremendous political pressure to New Delhi, May 22: As oil prices rise, Moody’s Investors Service said state-owned oil producers ONGC and Oil India Ltd face increasing risk of the government once again requiring them to share the fuel subsidy burden.

ONGC and Oil India had for more than 13 give relief to the general public from high fuel prices and some steps are expected to be announced this week itself.

“The government is taking the matter of oil prices seriously. years paid as much as 40 per cent of the underrecoveries arising from fuel retailers selling petrol, diesel, LPG and kerosene at a government-mandated price, which was way below the cost. This subsidy sharing ended in June 2015 with global oil prices plummeting. Petroleum minister will have a meeting with the officials of the oil companies. We are trying to work out a formula to reduce the prices in the next four days,” said BJP president Amit Shah.

But the risk of them being asked to once again bear a part of the subsidy is looming with the recent rise in international oil rates, Moody’s said in a report today.

“Because of the government's widening fiscal deficit, ONGC and OIL could be asked to

The issue of petrol and diesel prices is also expected to come for discussion during the Union Cabinet meeting on Wednesday.

According to sources, the finance ministry and bear part of the Indian government's fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” Moody's senior vice-president Vikas Halan said.

ONGC and OIL, it said, have not contributed to fuel subsidies since June 2015. — PTI the petroleum ministry are in discussion on how to resolve the crisis emerging from spike in crude oil prices. However, finance ministry is not in favour of cutting excise duty at the current junc- ture and wants to explore other measures including asking states to cut VAT.

“We cannot rely on excise duty cut alone, although I am not ruling out a possibility of cutting excise duty. We have to be mindful of any fiscal impact of any excise cut on fuel,” said sources. “Some steps to deal with rising oil prices are likely to come this week.”

Petrol price on Tuesday jumped `76.87 per litre in Delhi and diesel costs `68.08 a litre. In last nine days, petrol price has risen by `2.24 a litre and diesel by `2.15. The central government levies `19.48 a litre of excise duty on petrol and `15.33 per litre on diesel. State sales tax or VAT varies from state to state.