As petrol, diesel prices hit fresh record high, government looks at ONGC to share burden

As petrol and diesel prices continue to breach record highs in quick succession, to touch a new peak on Thursday, the government is reportedly looking at ONGC to share the burden. Notably, petrol prices on Thursday, were hiked by 26 paise to Rs 85.29 per litre in Mumbai, while in Delhi, petrol was retailing at at Rs 77.47 per litre on Thursday. Notably, this is the 11th straight hike in a row. Meanwhile, diesel prices were hiked by 16 paise to Rs 72.96 per litre in Mumbai.

According to a report in the Indian Express, the government is looking to ONGC to share the burden.“The Ministry plans to direct ONGC to sell its crude oil at below ruling international prices by capping the price at, say, $70 for the entire fiscal year. Oil India Ltd (the other national oil producer) will not be a part of this scheme,” a government official told the newspaper.

According to the Indian Express report, the government official said that ONGC’s contribution could pare the required price increase in petrol and diesel by one-third with an additional marginal relief provided by reducing the dealers’ commission by 18 paise per litre on diesel and 23 paise per litre on petrol. Further, ONGC’s burden sharing would provide close to Rs 30,000 crore for this exercise, which is equivalent to a Rs 2-per litre cut in excise duty on both petrol and diesel.

“The idea has been accepted in principle but the methodology and the numbers are to be worked out,” he said. Notably, after the discount, ONGC’s net realised price on crude oil is slated to be higher than $56 which it earned per barrel in fiscal 2017-2018. Currently, the government subsidy is limited to cooking gas, LPG and kerosene with transport fuels petrol and diesel out of its ambit. The burden sharing, said the official, was being considered as the “long-term solution to address the volatility and frequent revisions in rates” which Union Law and IT Minister Ravi Shankar Prasad announced on Wednesday.

Petrol and diesel prices have been on the boil, following Karnataka elections. “Rising fuel price is a crisis situation for government and it has to be handled with combination of steps. Finance ministry is consulting the petroleum ministry on rising crude prices,” PTI reported an official as saying. However, while there was speculation that an excise duty cut may be in the offing, Indian Oil Corp (IOC) Chairman Sanjiv Singh told PTI that there is no direction from the government for moderating prices and the three week hiatus before the Karnataka poll was to avoid sharp spike in retail rates.