New Delhi, Feb 2 (PTI) Voicing concern over world oilprices touching a 28-month high of USD 102 a barrel, FinanceMinister Pranab Mukherjee today said the government iswatching the situation closely, as he promised to "take care"of its impact on domestic retail fuel prices.
"Unfortunately, developments in the Middle East and itsimpact on the Arab world is causing uncertainty about (oil)production (and) about (its) availability. We are watching thesituation (closely)," Mukherjee told reporters here.
The spike in global rates has meant that the gap betweendomestic retail fuel price and their cost of production haswidened, necessitating action - either by way of priceincreaseor hike in government subsidy.
Diesel is currently being sold at a loss of Rs 9.23 perlitre while every 14.2-kg cylinder of domestic LPG isunderpriced by Rs 356.07. Kerosene through PDS is sold at aloss of Rs 21.60 per litre.
Unrest in Egypt fuelled Brent crude price to an intradayhigh of USD 102.08 per barrel yesterday, its highest levelsince late September 2008 after the Lehman Brothers bankruptcysent financial markets into a tailspin.
World oil prices are on the spike on fears the escalatingturmoil in Egypt will disrupt supply flows through thestrategic Suez Canal.
Pointing that India had managed the situation when crudeoil price had touched a record high of USD 147 per barrel inJuly 2008, Mukherjee said his ministry was in constant touchwith the Oil Ministry on the unfolding situation.
The government had in that fiscal (2008-09) given arecord Rs 71,292 crore in fuel subsidy out of the Rs 103,292crore total revenue state-owned oil firms lost on selling fuelbelow cost.
This year, the state firms are projected to lose Rs75,507 crore in revenues and the government has so farsanctioned Rs 21,000 crore fuel subsidy for the first ninemonths.
"... at that time (when crude touched USD 147 a barrel inJuly 2008) also, we had to manage the situation. Governmentwill take care of it (now as well)," Mukherjee said.
He did not elaborate on how the situation would bemanaged.
State-owned Indian Oil Corp, Hindustan Petroleum Corp andBharat Petroleum Corp have raised petrol price, which had beenderegulated, by Rs 10.44 a litre in eight instalments thisfiscal. A further hike of Rs 2.50 a litre is needed to levelthem with global rates.
Diesel, LPG and kerosene prices continue to be under tightgovernment control.