The country's oil companies will lose Rs 225,000 crore (Rs 2,250 billion) in revenue this fiscal on account of spike in crude prices, a situation that calls for an immediate increase in retail fuel prices, Petroleum Minister Murli Deora is believed to have told Prime Minister Manmohan Singh.
Sources said Deora, who called on the prime minister, also informed him that there was a limit to state-run oil marketing companies' capacity to absorb oil bonds and contribution by those having upstream operations.
"The upstream contribution during the year can be limited only to Rs 30,000 crore (Rs 300 billion) and they have a capacity to absorb oil
bonds worth only Rs 35,000 crore (Rs 350 billion). Another Rs 15,000 crore (Rs 150 billion) can be absorbed by oil marketing companies.
"This leaves a Rs 145,000 crore (Rs 1,450 billion) gap that has to be bridged with a combination of price increase and duty cuts," a source quoted Deora as informing Singh.
"I don't have anything to say," Deora told reporters when asked about his meeting with the prime minister.
Deora also met Finance Minister P Chidambaram on Tuesday but failed to convince him of the urgency to cut import and excise duties to avoid the Rs 2,00,000 crore (Rs 2,000 billion) revenue loss expected on petrol, diesel, domestic LPG and kerosene this fiscal.
Bharat Petroleum and Hindustan Petroleum have cash to buy crude oil only till July while Indian Oil can finance imports till September. The three firms face huge liquidity crisis as they are unable to realize full value of products sold.
The petroleum ministry is proposing to raise petrol price by Rs 10 a litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per cylinder to cut the Rs 580 crore (Rs 5.8 billion) per day loss made by the three oil firms by one-third.
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