Govt to wait for OPEC decision before revising fuel prices

New Delhi, Oct 23 (PTI) Emphasising that state-run oil
firms continue to make losses on fuel sales, Petroleum
Minister Murli Deora Thursday said government will watch for
the impact of O.P.E.C.’s decision Friday on global oil rates
before deciding on revision petrol, diesel and domestic L.P.G.
prices.

"We are watching international oil price scenario very
closely. O.P.E.C. is meeting tomorrow (to decide on cutting
its output in view of fall in prices) and we will see what
happens (to oil prices)," Deora told PTI here.

While international crude oil prices have fallen from
the highs of USD 147 a barrel in July, a sharp depreciation in
the value of Indian rupee against the U.S. dollar has wiped
away some of the gains.

Indian Oil, Bharat Petroleum and Hindustan Petroleum
were to break even on sale of petrol, diesel, domestic L.P.G.
and kerosene at USD 67 per barrel crude oil when one USD was
equivalent to 41 Indian rupees.

However with rupee almost kissing the 50 mark, the break
even point has now shifted to USD 57 per barrel. At
Wednesday's level of Rs 49.29 against a US dollar, the break
even point is USD 59.

The basket of crude India buys Wednesday averaged USD
61.47 per barrel and in second fortnight of October, it has
averaged USD 65.71 a barrel.

"In spite of fall in oil prices, which is a welcome
development, we are still incurring losses," Deora said.

Oil retailers sell petrol at a loss of Rs 2.41 a litre,
diesel at Rs 6.42 per litre, kerosene at Rs 28.07 per litre
and domestic L.P.G. at a loss of Rs 344.72 per cylinder.

The three firms in April-September lost Rs 92,853 crore
on fuel sales (audited figures) and are projected to lose Rs
147,486 crore in the full fiscal.

"I have not said that we will next week decide on
reducing prices. All I have said is that we will next week
review (the situation emerging from O.P.E.C.’s decision),"
Deora said.

Energy ministers of 12-member oil cartel Organisation of
Petroleum Exporting Countries (O.P.E.C.), which accounts for
40 percent of global crude oil production, are meeting Friday
to review the present international oil price situation and it
is widely expected that they would decide to curtail oil
production, which may again lead to a rise in international
oil prices.

A Petroleum Ministry official said cutting fuel prices
now will widen the revenue loss of state-run firms. "I don’t
see a trigger, unless political, for a reduction in fuel
prices."

"For a price cut to happen, international oil prices
have to sustain at levels lower than the break even point, for
at least a month. We cannot be seen lowering the prices on one
day's fluctuations. Tomorrow, if the prices go up, will the
oil companies be allowed to raise prices," he said.

Deora is believed to have met Prime Minister Manmohan
Singh on the issue earlier this week and had been advised to
wait for international oil prices to fall further before
taking the issue to the Cabinet.

Every time the U.S. dollar becomes dearer by one rupee,
the revenue loss on fuel sales jumps by Rs 8,500 crore.