The petroleum ministry has hit back at detractors pointing out that the Rs 5 per litre hike in the price of petrol was only half of what was actually required.
It claimed that even after the hike of Rs 5 per litre, state-owned oil companies continue to lose another Rs 4.58 per litre. “Loss” by public sector oil companies such as Indian Oil and Bharat Petroleum is calculated after adding a ‘desired profit’ to the actual cost of the product.
For example, if a litre of petrol costs Rs 65 per litre and Indian Oil would like a profit of Rs 5 per litre, then Indian oil will claim a ‘loss’ of Rs 5 even if it is able to sell petrol at Rs 65. In other words, oil companies include their absent profit in their under-recoveries.
The ministry said that besides the Rs 4.58 that is being ‘lost’ on a litre of petrol, they are losing Rs. 14.66 per litre on Diesel, Rs. 28.28 per litre on PDS Kerosene and Rs. 329.73 per cylinder of Domestic LPG.
If no further increases are made and crude oil prices remain where they are, the three oil companies will lose Rs 1.75 lakh crore per year, compared to the usual Rs 30,000-40,000 crore.
The petroleum ministry pointed out that since the last increase in the price of petrol back in January, the price crude oil purchased by India has increased from $94 per barrel to $116 per barrel.