PSU oil marketing companies propose fuel rationing, halt to new LPG connections

17 May 2008

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Consumers of fuel in the country may be in for tough times if the government agrees to the latest proposal by loss-making oil PSUs. Faced with mounting losses that threaten to touch Rs1,80,000 crore this fiscal, indicating an increasingly ''tight situation,'' the oil marketing companies (OMCs), namely, IOC, HPCL and BPCL,  have proposed a series of rationing measures.

According to the proposal, the OMCs have asked for ''immediate freeze'' on issuing of new LPG connections throughout the country, fixing of one LPG cylinder per family quota, curtailing imports of diesel purchased at high international prices and all plans for expansion of retail outlets be put on the hold till the situation stabilises.

Highly placed sources said unable to bear the burden of rising crude oil prices and the refusal of the government to take corrective measures in shape of issuing of ''enhanced oil bonds'' and increasing the retail sale price of motor vehicle fuel and the LPG, the OMCs have petitioned the Petroleum Ministry to take these ''steps immediately'' in order to curtail the losses at the present levels. (See: Finance ministry refuses to issue Rs44,000 crore oil bonds)

The OMCs are losing over Rs550 crore a day on sale of petrol, diesel, kerosene and LPG at subsidised rates. ''`The oil companies are borrowing Rs3,500 crore per month to keep going. The borrowings (for the three firms) have reached Rs65,000 crore,'' a senior official remarked.

However, with general elections due soon, it is unlikely that the government will allow companies owned by it to go ahead with their threat. An official in the oil ministry said, ''Oil PSUs have not taken any such decision. OMCs give several suggestions, including increasing prices of auto fuel, LPG and kerosene. The government considers all suggestions and takes the most appropriate action in the benefit of all.''

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