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No plan to hike fuel prices as of now: Govt

The Government said it has not taken any call on hiking the fuel prices, including petrol, as has been reported in some section of the press in the past couple of days.

"There is no immediate proposal to increase the fuel prices including that of petrol," Union Oil Minister Jaipal Reddy said in New Delhi today.

"Floating a Cabinet Note is different from taking action," he added.

The Government will need to take difficult decision on fuel prices, but not immediately, Reddy said.

Shares of state-run oil marketing companies (OMCs) such as Indian Oil Corp. (IOC), BPCL and HPCL fell after Reddy's statements.

While BPCL and HPCL lost nearly 3% each, IOC was down just over 1%.

It is up to the Union Cabinet to decide on the thorny issue of reducing hefty subsidies on diesel, LPG and kerosene, Reddy told reporters in the capital.

"It is my duty as a minister to bring out the facts in front of the Cabinet Committee of Political affairs…don’t know when the CCPA will take up the issue,” Reddy said, adding that there is a need to reduce the under-recoveries of OMCs.

The hike in all fuel prices has been deferred by a week, according to a report.

There were reports that OMCs were going to hike petrol prices by as much as Rs. 5 on Friday, while that of diesel and kerosene will be increased next week.

Indian Oil Corp. (IOC) Chairman R.S. Butola said OMCs were currently losing nearly Rs. 6 per litre on petrol sales.

"There is a need to raise petrol prices. We are in consultations with our colleagues at other oil marketing companies and stakeholders," Butola said.

The OMCs are losing Rs. 5.5bn a day on under-recoveries as a result of higher crude oil prices in the global markets.

This works out to a loss of Rs. 17/litre on diesel sales, Rs. 32.7/litre on kerosene sales, and Rs. 347/cylinder on cooking gas sales every day.

Infocus News

IIFL on Oil & Gas : OMC under-recoveries seen increasing in FY13

IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, in a recent report on Oil & Gas sector sais that, " We expect 2QFY13 under-recoveries at Rs366bn, taking the total for 1HFY13 to Rs. 845bn.

According to IIFL report, with increase in the retail price of controlled products seeming elusive, under-recoveries may reach Rs1,700bn for FY13. The oil marketing companies (OMCs) are fully compensated for losses on controlled products in FY13.

However, losses on petrol, which could reach Rs6/l in September, coupled with high interest burden owing to delayed cash payout by Government of India (GoI) for under-recovery compensation, will weigh on earnings. We prefer BPCL where we expect positive news flow from drilling in Mozambique and Brazil, brokerage added.
 
The report was published by IIFL’s Institutional Equities Research desk.

Domestic News

ONGC mulling Urea Manufacturing unit in Tripura

The Minister of State for Petroleum and Natural Gas R.P.N. Singh has said, in a written reply in the Lok Sabha today, that the Oil and Natural Gas Corporation Limited (ONGC) is considering setting up a urea manufacturing unit in the state of Tripura for early monetization of the new gas discovery from Khubal field subject to techno-commercial viability. ONGC is in the process of identifying a reputed fertilizer domain company for strategic partnership through EoI (Expression of Interest) process.

The Minister further said that the feasibility is to be carried out based on a suitable site, in and around Khubal Gas field, to be identified in consultation with Government of Tripura. ONGC does not have any urea manufacturing unit as on date. He also said that it will take approximately 44-48 months from investment decision/zero date for project implementation. 

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International News

US accuses BP of gross negligence in Gulf of Mexico

The US Department of Justice reportedly accuses BP gross negligence in  the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

According to reports, the DOJ alleges in an Aug. 31 federal court filing that some of the arguments made by BP in earlier filings were “plainly misleading”.The filing focused on a key well pressure test and said the way it had been "so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence.

Fines associated with the gross negligence charges could potentially add about $21 billion to the other payments BP has made or will make related to the Deepwater Horizon disaster, reports added.

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