Oil Minister Jaipal Reddy hints at another fuel price hike

Visakhapatnam, Feb.21 (ANI): Petroleum and Natural Gas Minister S. Jaipal Reddy has ruled out reducing the current price of petroleum on grounds that oil marketing companies in the country are facing a financial crunch and incurring losses.

Speaking at the launch of the Rupees 22 billion Clean Fuels Project commissioned by Visakh Refinery of HPCL here, Reddy said politics cannot guide the principle to determine the rise in price of petrol, and added that fuel prices in the international market were extremely volatile.

"I don't know whether I should be happy at becoming a petroleum minister or not. There is pressure from the public, the opposition parties and my colleagues in the Congress all the time not to hike diesel, kerosene and LPG though the oil companies are incurring huge losses to the tune of 1.5 lakh crore rupees (1.5 trillion rupees). And elections are always round the corner in the country. If elections are the criteria (not to raise prices) we can never hike fuel prices as there are polls every year in India, the world's biggest democracy," Reddy said.

He admitted that the increase in fuel prices was a cause of concern and that there was no choice but to raise fuel prices as per international standards.

Reddy added that the global economic slowdown led to the hike in global crude prices, which would eventually take toll on the common man in India.

"There is a crisis in Iran and Arab countries. Economic slowdown in European countries and the dollar exchange rate has gone up led to the hike in global crude oil prices due to which oil companies are incurring heavy losses," said Reddy.

Last year, Reddy attributed revenue losses of India's oil marketing companies due to sales at subsidised rates, which are expected to hover at 1.3 trillion rupees in this fiscal year ending March 31, 2012.

India subsidises retail prices of diesel, kerosene and cooking gas but petrol prices were liberalised over a year ago.

The costs of these price caps have climbed as international oil prices have risen. (ANI)