RIL, Essar Raise Petroleum Prices

Private sector diesel and petrol sellers have increased prices of auto fuels even as the high international crude oil prices are worrying the UPA government and keeping its oil companies guessing on what will be the government decision.

Sources told DNA Money, Reliance Industries Ltd and Essar Oil, the biggest private players in petroleum retailing in the domestic market, have increased petrol and diesel prices in the range of Rs 4.5 to Rs 5 a litre even at the cost of losing market share to the government-owned company.

When contacted, a RIL spokesperson offered no comments though Essar sources confirmed the news. A senior executive in one of the companies on condition of anonymity, however, said, "We have increased prices of diesel by Rs 4.5 a litre and Rs 5 a litre on petrol over the PSU prices but it only partially covers our losses since we will lose in sales volumes with PSUs selling at a lesser price."

He said the companies did not have any choice. At a news conference here, Petroleum Minister Murli Deora said, "We don't want to burden poor man...we'll let it (oil price) stabilise then we will take a decision."

DNA Money was the first to report on Monday that petroleum price hike was not on cards for now.

"As the international oil prices are close to $100 a barrel, under recoveries can only go up further and we are very concerned…Appropriate decision on price will be taken at an appropriate time," Deora said.

The government flip-flop on petroleum pricing policy has resulted in a curious situation where the biggest private sector refiner RIL prefers to export its products while also importing diesel and petrol to feed its retail outlets.

"RIL has been buying petroleum products from Essar and also importing for selling through its retail outlets. The net effect is a loss to the company," claimed the private company executive.