Polls may have forced oil cos to bear losses

Ravi Dutta Mishra & Subhash Narayan

Mumbai, April 10 (IANS) In contrast with highest international crude oil prices so far this year, the domestic fuel prices have seen fewer revisions, indicating that the policy of market-determined retail pricing of petroleum products has been put on hold till the elections.

Energy experts have said the price of transport fuels, petrol and diesel may shoot up post polls if the international prices remain high. The state-run oil marketing companies will also jump to balance their books. Indications are that these companies might be keeping the prices artificially low at the behest of the government so as to prevent consumer outrage.

Since January, the benchmark, Brent crude has surged nearly 30 per cent while the price of petrol in the national capital has witnessed an uptick of merely 6 per cent. While the prices remained unchanged for several days at a stretch, these were reduced twice last week when the Brent hit a 5-month high.

An India Oil Corporation spokesperson said the domestic prices don't entirely depend on the international crude prices. Domestic prices are usually affected in a fortnight after the global swing.

When asked why there was no price stability around October when fuel prices sharply rose, he said, "The prices are a bit stable now...but these may go up, maybe, in a few days."

He denied any relation between stable prices and the elections.

Experts, however, differ.

B.K. Chaturvedi, former member Planning Commission, said: "Domestic petrol prices keep in sync with the international markets. But what normally happens is that all ruling parties during elections influence the decisions of government-owned oil companies. After the elections are over, they re-adjust the prices in accordance with the markets. So, in the transition period, oil companies bear losses."

If the Brent were high post polls, the oil marketing companies would face a lot of trouble, he said.

Another expert from a private consultancy firm, who didn't want to be named, said since many factors are responsible for domestic oil prices, one would have to consider the net build-up. "But, yes, right now domestic fuel prices are pretty low -- disproportionate to the international prices," he said.

(Ravi Dutta Mishra can be contacted at ravidutta.m@ians.in and Subhash Narayan at subhash.n@ians.in)