State-owned oil firms may hike petrol price by about Rs 0.50 per litre from June 16 as last month's steep increase in rates is not enough to cover the cost of raw material (crude oil)."If there are no (political) pressure, we would like to hike petrol price from midnight of June 15 and 16," a top official of Indian Oil Corp (IOC), the nation's largest fuel retailer, said in New Delhi on Wednesday.IOC and its sister PSUs had on May 15 raised petrol price by Rs 5 per litre, the biggest hike ever."Even after that hike, we were losing Rs 4.58 per litre.After including VAT, the desired increase at retail level in Delhi came to Rs 5.50 a litre," he said.The desired hike in price has been calculated based on the average crude oil price of the first fortnight of May.However, from June 1, which takes into account the average of second half of May when international rates moderated, IOC is losing Rs 1.15 per litre. After including VAT, the desired hike in Delhi would be Rs 1.35 a litre."We will have to take a view (on hiking petrol price) next week," he said. "The government is not compensating us for selling petrol at below international cost since June 2010 when its pricing was freed."Though the government had freed petrol pricing from its control, state-owned retailers have been informally being guided by 'advice' from the oil ministry. They did not hike rates in the run-up to the assembly elections in five states, including West Bengal and Tamil Nadu. On diesel, the official said, the company was losing Rs 12.64 per litre. After adding VAT, the desired increase in rates in Delhi is Rs 14.22 per litre.Similarly, on domestic LPG it is losing Rs 381.14 per cylinder and Rs 27.47 a litre on PDS kerosene."We are losing Rs 256 crore per day on selling the three fuel at government controlled price. At this rate, we will end the fiscal with a revenue loss of Rs 89,300 crore.The industry (IOC, Bharat Petroleum and Hindustan Petroleum) are likely to see Rs 160,568 crore of revenue loss in 2011-12 fiscal.(PTI)
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In a setback to the Cairn-Vedanta deal, Solicitor General Gopal Subramanium has reaffairmed that the government can impose preconditions like equitable sharing of royalty in the all-important Rajasthan block for clearing Vedanta Resources' takeover of Cairn India.Contrary to media reports, the nation's second highest law officer has reiterated his earlier opinion that Cairn or its successor should share cess and royalty with state-owned Oil and Natural Gas Corp (ONGC) in the Rajasthan block.In his second opinion, which was sought by Finance Minister and head of a ministerial panel vetting the $9.6 billion deal Pranab Mukherjee, the SGI said, "The government is not bound to grant consent ipso facto or mechanically."The precondition that Cairn/Vedanta agree to cost-recovery of Rs 18,000 crore in royalty that ONGC has to pay on the Rajasthan block would be "defensible on parameters of public and national interest," the SGI said in the second opinion.In his first opinion on March 24, the SGI had categorically stated that transfer of Cairn India shares to Vedanta should be allowed only if the latter agrees to treating royalty paid by ONGC as cost-recoverable from its revenues.ONGC owns a 30 per cent stake in Cairn India's mainstay Rajasthan block, but is liable to pay royalty on the entire output from the field. Cairn is also contesting its liability to pay a Rs 2,500 per tonne cess on its 70 per cent share.But unlike royalty, it is treating cess as a cost-recoverable item. All cost-recoverable items like capital and operating expenditure are first deducted from revenues earned from the sale of oil before profits are shared between stakeholders, including the government.Cairn Energy, which is selling a 40 per cent stake in its Indian unit to Vedanta, and the London-listed mining group are opposed to making royalty cost-recoverable as it will lower the profitability of Cairn India."The purpose of consent is the provision of a power to regulate the performance of obligations which arise under a contract and not to defy them. Hence, a consent can be conditional," the SGI said in the second opinion on April 6.The government "cannot deny consent except on logical grounds. Such conditions as preserve many different components of public interest can be validly imposed. The conditions must be borne out of fairness, vigilance and public interest," he said.The Group of Ministers headed by Mukherjee is slated to meet on May 27 to discuss imposing preconditions on approving the deal. The GoM recommendation will go to the Cabinet Committee on Economic Affairs (CCEA), which had on April 6 asked the ministerial panel to vet the deal.(PTI)
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