Looking at ways to stop bulk diesel users from securing fuel from retail outlets

With dual pricing for diesel in place, oil marketing companies (OMCs) are looking at ways to stop bulk diesel users from securing the fuel from retail outlets. The three public sector OMCs — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation Limited — want the government to put in place regulations for this.

A hike of nearly Rs. 10 a litre for the bulk diesel consumers that includes the railways, transport undertakings and the defence, cement, mines and power sectors will trigger an all-round hike in public road transport costs, rail fares, costs of cement and other infrastructure related activity across the country.

The oil marketing companies (OMCs) have also quietly raised the price of the domestic non-subsidised LPG cylinder by Rs. 46.50, a move that is likely to impact those who consume more than nine cylinders a year.

Govt has permitted oil companies to increase diesel price by 45 paise a month

Bulk consumers will have to pay market price, to be revised every fortnight; Consumers would get nine subsidised cooking gas cylinders a year, instead of six at present. Unwilling to announce a hike in diesel price, the government on Thursday allowed oil marketing companies to increase the price in small doses periodically and bring it in line with global rates. To begin with, an immediate increase of 45 paise a litre was announced for sales through retail outlets, while bulk consumers, which add Rs 12,907 crore to the subsidy burden, would have to pay market price, to be revised every fortnight.

Faced with a hefty bill of close to R1 lakh crore this fiscal towards compensating oil marketing companies on selling diesel below cost and naysaying by the finance ministry, the petroleum ministry is set to ask the bulk consumers of the fuel to buy it at market rates.

Currently, bulk consumers — power plants based on diesel, companies with captive power units, the railways and road transport corporations — buy the fuel at subsidised rates but at slightly lower rates than the retail consumer, thanks to a waiver of dealers’ commission and discounts offered by the oil companies which compete to get the tenders.

The Indian Oil Corporation’s R910-crore LPG pipeline project has hit a 20-acre sticky patch in Haldia. The land is crucial since the oil major has planned a pumping station on it which would enable gas flow through a 300-km-long pipeline from Haldia to Durgapur and right up to Kalyani.

An IOC official said the entire length of the pipeline from Paradip in Orissa to Haldia and then to Kalyani in West Bengal is 710 km. There is no problem of land for the entire stretch but only 20 acres has become detrimental to the project.

The Union petroleum ministry has issued directives to Indian Oil Corporation (IOC) to not consider any investment in Haldia Petrochemicals (HPL) since the oil major has no room to leverage its finances with government subsidy required to post profits.

IOC posted a R22,451 crore net loss in the first quarter of FY 13, though in the second quarter it came round the corner posting a R9,611-crore net profit. A petroleum ministry official told FE that IOC’s 9.6% holding in HPL already has a negative impact on its balance sheet since HPL shares are R(-)5 per share at present.

Three people were killed and one person has been reported missing in the fire accident at IOC at Hazira in Surat on Saturday noon.

Finmin aims to make substantial savings in oil subsidy payouts

Alarmed by the R1.7-lakh-crore oil subsidy demand for this fiscal, the finance ministry has decided to revisit a suggestion made by expert committees in the past: Work out the subsidy entitlement of oil marketing companies (OMCs) according to 100% export-parity pricing of petroleum products. Under this system, the refinery-gate price of products — petrol, diesel, cooking gas and kerosene — due to OMCs will be arrived at as an average of export (FOB) prices of these product in select markets. The difference between the price realised by OMCs — they sell below cost in the subsidy regime — and the export price determined will be the “under-recoveries”, compensated through subsidy.

All three victims are contract workers; compensation ordered

Three persons were killed in the fire that broke out in a storage tank of the Indian Oil Corporation (IOC) terminal at Hazira, near here, on Saturday. The fire was contained after a 21-hour operation, officials said on Sunday. “The body of one more person was recovered this afternoon [Sunday]. While two persons, whose bodies were recovered earlier, have been identified, we are trying to identify the third,” Surat Collector Jayprakash Shivhare told PTI. “All the three persons… are not regular, but contractual employees.”

The oil ministry has moved two separate cabinet notes - one to raise cap on supply of subsidised cooking gas cylinders and the other to increase fuel prices, particularly diesel, by less than a rupee per month to pair it with market rates and eventually deregulate it in next 15 months.

The ministry has also proposed to reduce one-third subsidy on kerosene by 2014-15 and on cooking gas by a quarter in this year, government officials said. According to oil ministry's recent data, state oil firms are losing Rs 9 a litre on diesel, Rs 30.60 on kerosene and Rs 490 per cylinder on cooking gas.
The proposals will substantially reduce government's subsidy burden on diesel, kerosene and liquefied petroleum gas (LPG), officials said. The estimated fuel subsidy for 2012-13 is about Rs 166,000 crore, out of which the finance ministry has sanctioned Rs 30,000 crore and released the first installment of Rs 10,000 crore to state oil marketing firms this week.

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