Why petrol hike: FM hasn't paid subsidy bill of Rs 64,900 cr

The threat of another petrol price hike barely a month after September’s whopper has government spokespersons ducking for cover. But Manish Tewari, Congress spokesman, made a brave attempt nevertheless.

Faced with a volley of questions on how the government can countenance another petrol price hike this month (Rs 1.50-2 a litre is the number being spoken about) after winking at a Rs 3.30 hike in September, Tewari took the high road: “This question should be asked from the petroleum ministry or the concerned oil companies. After the dismantling of the administered price mechanism (APM), this issue comes under the jurisdiction of oil companies. Oil companies can better answer why and for what reason the fuel price hike took place.”

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Actually, Mr Tewari, this is disingenuous. It is completely wrong to deflect the blame for petrol price hikes (past or future) to the oil companies when it is your government which has pushed them to desperate measures.

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The problem is very simple. At current international crude prices, and given the depreciation of the rupee, oil companies lose Rs 9.27 per litre of diesel, Rs 26.94 per litre of kerosene, and Rs 260.50 per cooking gas cylinder, says Business Line.

Petrol prices are being hiked repeatedly because the government will neither free diesel prices nor compensate oil companies for their losses.

Just look at the price differential, and you will know what we mean.

In Mumbai, petrol sells for Rs 71.92 a litre while diesel goes for Rs 45.99. This huge differential is there not because diesel costs more to produce (it does, but not by much) but because oil companies have to cover their losses somewhere: petrol and aviation fuel are the only two options open to them.

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So, Mr Tewari, if you believe your statement that “as a political party we are naturally concerned with anything that hurts the common man,” you should tell Pranab-da to release the subsidies due to the oil companies. All three companies - Indian Oil, Bharat Petroleum, and Hindustan Petroleum - are racking up huge losses, and the unpaid bill just for the first half of the year is Rs 64,900 crore.

For the full year, you can double that figure - nearly Rs 1,30,000 crore of losses that Pranab-da will owe them.

Still think they are responsible for the petrol price hike?