Country's top oil firm warns of fuel rationing

CHALLENGE TO CHIDAMBARAM: Finance Minister has rejected further cuts in fuel duties.

    

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Keywords: Chidambaram, Global Fuel Crisis

New Delhi: The Indian Oil Corporation, the country’s largest state oil marketing company, says it would be forced to ration fuel if the prices of diesel and petrol are not increased.

IOC chairperson Sarthak Behuria warned of this after the company reported its first quarterly loss in three years. “We will have to restrict the sales to a reasonable level, which would be in lieu of what we have or what we have planned for,” said Behuria on Wednesday.

“It is not a crisis situation or that we don't have a product but obviously we are not going to import diesel incurring a huge loss. Among petrol, diesel and LPG it is obvious that diesel will get a beating,” he said.

IOC will only be able to afford to buy crude at the current sky-high rates up until the end of September, Behuria said.

IOC has posted a net loss of Rs 414.27 crore for the fourth quarter ended March 31, 2008 as compared to net profit of Rs 1,502.69 crore for the corresponding quarter last year.

The Petroleum Ministry has proposed to raise petrol price by Rs 10 per litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per cylinder but the Government’s Left Front partners have refused to back any such move

A group of ministers (GoM) on Wednesday failed to reach a decision on a proposal to raise fuel prices.

External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Petroleum Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia met for an hour to consider the options they have to tackle the fuel price crisis.

A PTI report quoting unnamed sources said the ministers may meet on Thursday again to deliberate on the options before the government to defuse a crisis that would leave state oil firms without cash to import crude oil.

Deora had said that the Government was considering the option of imposing an oil cess but the Finance Ministry on Wednesday denied that there was any such proposal.

State oil firms BPCL, HPCL and IOC are suffering losses amounting to Rs 580 crore daily. BPCL and HPCL have cash to buy crude oil only till July and IOC can finance imports till September.

The firms sell their fuel at discounted rates set by the government and far below oil's surge to around $130 a barrel on the world market. They have appealed for price hikes and duty cuts.

(With inputs from PTI and Reuters)