Fears of political turmoil spreading from Egypt to the world's top oil producers in the Middle East hoisted Brent crude oil to over $100 a barrel, casting a shadow on the finances of India's top oil firms as the inflation-weary government is reluctant to raise fuel prices.
State-run refining and marketing firms like Indian Oil Corphave not been allowed to raise prices of diesel, cooking gas and kerosene for seven months, even though crude oil has risen by a quarter. The new oil minister, Jaipal Reddy, recently ruled out deregulation of diesel, saying such a move is a political minefield.
The oil ministry has estimated that state firms are losing Rs 1.90 a litre on petrol, Rs 9.20 a litre on diesel, Rs 21.60 a litre on kerosene and about Rs 400 per cylinder on cooking gas. Indian Oil chairman SV Narasimhan said the situation was disturbing. "It is definitely a concern. We hope it is temporary. I hope prices come down. It has gone up too fast in too short," he told the ET.
The situation is worrying for India, which imports about three-quarters of the oil it consumes. Some technical analysts say that Brent crude oil can touch $110 per barrel in four weeks and soar to $125 later in the year.
While the government tries to cushion the impact of soaring crude prices by freezing diesel rates and askingONGC and the oil marketing firms to share part of the subsidy burden, economists have cautioned that subsidy payments can upset India's fiscal calculations.
The head of state-run Bharat Petroleum Corp, shared IOC's concerns. "It is a difficult situation. Refineries are doing well but what we are getting from refinery is lost on marketing front (as state-set diesel prices are low)," said BPCL chairman & managing director RK Singh:
State oil firms had deferred their quarterly earnings announcement before the finance ministry sanctioned subsidy reimbursement of Rs 8,000 crore. Oil minister Jaipal Reddy had asked for Rs 10,000 crore.
Oil industry officials say that the ad hoc and opaque subsidy payment made it difficult for companies to plan investments, while analysts say it is virtually impossible to forecast share performance in the absence of clear guidelines for subsidy.
"We need to make some reasonable profits to be able to invest in necessary infrastructure that maintains supply of fuel in the country. Either we should be allowed to raise fuel price, if not, then government should provide adequate compensation," Mr Singh said.
A director at Hindustan Petroleum Corp , who did not want to be identified, said that even in the case of petrol, which has been freed from government control, state firms were not charging market rates, keeping in mind the sensitivity of the issue.
State-run refining and marketing firms like Indian Oil Corphave not been allowed to raise prices of diesel, cooking gas and kerosene for seven months, even though crude oil has risen by a quarter. The new oil minister, Jaipal Reddy, recently ruled out deregulation of diesel, saying such a move is a political minefield.
The oil ministry has estimated that state firms are losing Rs 1.90 a litre on petrol, Rs 9.20 a litre on diesel, Rs 21.60 a litre on kerosene and about Rs 400 per cylinder on cooking gas. Indian Oil chairman SV Narasimhan said the situation was disturbing. "It is definitely a concern. We hope it is temporary. I hope prices come down. It has gone up too fast in too short," he told the ET.
The situation is worrying for India, which imports about three-quarters of the oil it consumes. Some technical analysts say that Brent crude oil can touch $110 per barrel in four weeks and soar to $125 later in the year.
While the government tries to cushion the impact of soaring crude prices by freezing diesel rates and askingONGC and the oil marketing firms to share part of the subsidy burden, economists have cautioned that subsidy payments can upset India's fiscal calculations.
The head of state-run Bharat Petroleum Corp, shared IOC's concerns. "It is a difficult situation. Refineries are doing well but what we are getting from refinery is lost on marketing front (as state-set diesel prices are low)," said BPCL chairman & managing director RK Singh:
State oil firms had deferred their quarterly earnings announcement before the finance ministry sanctioned subsidy reimbursement of Rs 8,000 crore. Oil minister Jaipal Reddy had asked for Rs 10,000 crore.
Oil industry officials say that the ad hoc and opaque subsidy payment made it difficult for companies to plan investments, while analysts say it is virtually impossible to forecast share performance in the absence of clear guidelines for subsidy.
"We need to make some reasonable profits to be able to invest in necessary infrastructure that maintains supply of fuel in the country. Either we should be allowed to raise fuel price, if not, then government should provide adequate compensation," Mr Singh said.
A director at Hindustan Petroleum Corp , who did not want to be identified, said that even in the case of petrol, which has been freed from government control, state firms were not charging market rates, keeping in mind the sensitivity of the issue.
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