Surging global prices to trigger domestic fuel tariffs

New Delhi, Apr 23 (UNI) With the global crude oil poised to surpass a record 75 dollars a barrel, the domestic tariff will soon follow suit with the government planning for a hike of at least a rupee by next month end.

Crude-oil prices had broken through 75 dollars a barrel to set a new record yesterday, fuelled by concerns about Iran's nuclear ambitions and tight U S gasoline supplies.

The price is highest since August last, as US-Iran nuclear standoff threatened to snowball into something major, coupled with supply concerns from Nigeria and a fall in US reserves.

Though the ballooning crude is expected to hit the profit margins of the oil marketing companies which are struggling to maintain profits.

The current set up requires oil-marketing companies to share the subsidy burden. In return the Government issues oil bonds to these companies, which help them mitigate their losses.

Moreover the state-owned Indian Oil Corp (IndianOil) is hoping that the government will revise the price of petrol and diesel by May end or June.

''We are hopeful of a government intervention by May end or June considering the present increase in global oil price and our under recoveries,'' India Oil CMD, Sarthak Behuria said.

Despite Indian Oil refinery margins having improved at 4.5-5 dollars per barrel, Mr Behuria said the company was losing Rs 80 rores a day as the retail price of petrol was Rs 4-5 per litre below the desired level.

Mr Behuria said the Indian Oil was expected to maintain profits at the 2004-05 level.

In London, the price of Brent North Sea crude for June delivery struck a record high of 74.22 dollars per barrel. New York's benchmark contract for light sweet crude for May delivery hit an all-time peak of 72.49 dollars.

The under-recoveries of oil companies like IOC, BPCL and HPCL are expected to shoot up.

BPCL too expects a revenue loss on sale of fuel to be about Rs 4000 crore this fiscal.

''Government is fully focussed on the hike. There will definitely be a price increase ... It is a matter of time. We are expecting it between May 15 to 31. Under-recoveries are rising to a large extent," said S V Narasimhan, Director- Finance, IOC Global oil prices show no sign of easing and if domestic retail prices are not hiked, India's oil marketing companies could suffer losses of Rs 60,0000 crore.

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