Reports suggest petrol price rollback; HPCL chief says ‘no’

Amid protests against last week's hike in petrol prices by key Congress allies, particularly West Bengal chief minister Mamata Banerjee of the Trinamool Congress, several reports today suggest that the government may roll back the price for the first time since January 2009. The Economic Times suggests the rollback may be in the range of 30-50 paise.

However, S Roy Choudhury, chairman and managing director of Hindustan Petroleum Corp Ltd (HPCL), one of the three state-controlled oil retailing firms, seemed to discourage such expectations. "We are not facing any pressure from the government for prices. We haven't got any instructions for any rollback of price. We still have 0.2 paise under recovery, so we cannot be reducing prices," he told newspersons in New Delhi.

Choudhury said that there was huge pressure on oil companies because of the under-recoveries. He added that HPCL ''has incurred a loss of Rs6,833 crore due to under-recovery in the first quarter, while the mark to market (MTM) loss for the second quarter was at Rs1,000 crore.'' He said under-recoveries cost Rs1,500 crore last year; and that HPCL currently requires Rs56,000 crore for crude purchases a year, and its borrowings stand at Rs30,000 crore.

Despite fluctuating crude oil prices, oil companies have raised petrol price 13 times since June last year when the government decontrolled the fuel.

Two consecutive increases in less than two months have triggered stronger protests than usual.

International crude oil prices softened by $3 a barrel in the early part of this fortnight. This is seen as an opportunity for a rollback, as oil retailers fix prices on the basis of prices and exchange rates prevailing in the proceeding fortnight.