Oil firms threaten a steep hike

India's oil marketing companies have threatened to increase the price of petrol by Rs8 per litre if the government fails to compensate them for selling the fuel below the market price.

Sending a warning to the petroleum ministry, oil firms have said that it was proving difficult to sell the fuel at the current price and the companies would not be able to import crude oil if the government did not take the requisite step.

“We have been very patient, not raising prices since December despite our cost of production spiralling. But there is a limit to which we can borrow money and produce fuel for the country,” said RS Butola, chairman, Indian Oil Corporation (IOC).

The companies have said if the government is not able to increase petrol price, it should once again declare petrol as a regulated commodity. They have also urged the government to cut the Rs14.78 excise duty levied on petrol production.

Interestingly, while the petroleum companies do not have enough money to import crude oil from outside, the UPA government does not have enough political support to increase the prices. Its key ally, Trinamool Congress, has threatened to pull out if the government increases fuel prices again.