Click to play videoNew Delhi: Since the last fuel price hike in September 2005, global crude oil prices have risen by nearly 30 per cent and Indian oil marketing companies like Indian Oil Corporation (IOC), Hindustan Petroleum (HP), and Bharat Petroleum Corporation Ltd. (BPCL) were faced with losses in revenue of about Rs 74,000 crore in 2006.
The amount is almost double of what they faced in 2005.
International crude prices are currently above $70 a barrel, and predictions are that it will touch the $100 mark.
So if the domestic prices do not move in tandem, the Government says that it could spell doom for the Navratna oil companies.
"You see our Navratnas are bleeding. It is impossible for them to survive considering the amount of loss the have made. Banks are not giving loans to even one of our blue-chip PSU," Petroleum Minister Murli Deora says.
"Banks have reduced their credit ratings of the Government of India owned PSU's and it has never happened before," Deora adds.
Fuel Price Hike |
The new burden share
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As per the old pricing model, consumers, government and oil companies were sharing 33 per cent each of the price burden. But, now as per the new model announced on Monday consumers will now only shoulder about 12 per cent.
Meanwhile, the Government share this year has doubled from last year, with oil bonds to companies pegged at Rs 28,000 crore as well as revenues from customs duty cut from 10 per cent to 7.5 per cent.
The fuel hike is a shock for many, but compared to other countries, Indians still pay a heavily subsidised price for fuel. But the oil companies still have to battle with the heavy subsidy burden of kerosene and LPG, for which there has been no hike.
(With inputs from Rohini Singh)
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