The Hindu Business Line : ‘Petro prices: Corrective action must be taken soon’

New Delhi, Feb. 15 Just a day after the Government marginally raised the prices of auto fuels — petrol and diesel — the Petroleum Secretary, Mr M.S. Srinivasan, on Friday said that “the unwillingness or inability of the Government to go for market-determined prices could affect, hamper, handicap the oil sector in the days to come.”

Speaking at a plenary session on ‘The challenge of energy security in India: The way forward’ at FICCI here, he said “corrective action has to be taken soon otherwise capacity addition plans in the downstream sector would be compromised.” Even upstream companies like Oil and Natural Gas Corp (ONGC) would be “handicapped” as they are made to share the burden of the revenue loss of fuel sale suffered by the downstream companies, he said.

The upstream major ONGC appears like a marginal player in front of Chinese companies when they go for global acquisitions because they bring to the table $1 billion as against $10 billion from China. “Public opinion has to be mobilised in our favour for making corrections in pricing policies,” he said.

After much debate the Government had raised petrol and diesel prices from February 14 midnight. While petrol price were increased by Rs 2 per litre, diesel prices were increased by Re 1 a litre.

The Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have all lined up investment of billions of dollars to raise refining and retailing capacities but with the hit in their profitability due the cap on the retail selling prices, these investments may get delayed.

Oil India IPO

Speaking to newspersons at the sidelines of the session, Mr Srinivasan said, “The forthcoming initial public offer (IPO) of State-owned Oil India Ltd (OIL) will proceed as per the plans.”

“OIL is a solid and stable company. We don’t see any change in IPO plans,” he said. The IPO estimated to raise up to Rs 1,500 crore is likely to hit the capital market next month.

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