Gurgaon: Faced with the predicament of state-owned fuel retailers suffering rising revenue losses on petrol sale, the petroleum ministry has sought subsidy from the finance ministry as compensation for the companies. This, when the fuel's pricing has been "deregulated" since June 2010.
Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd have had to keep petrol prices suppressed in view of political compulsions, despite the fuel's deregulated status on paper.
"We have taken up this matter with the finance ministry," Petroleum Minister Reddy said on the sidelines of the inauguration of Honeywell India Technology Centre.
"We have asked them to compensate OMCs for their entire losses on petrol," the minister said.
On Monday, Indian Oil Chairman R.S. Butola had said oil marketing companies have requested the government to compensate them for revenue losses on sale of petrol.
Indian Oil has incurred a total revenue loss of around 15.60 bln rupees on sale of petrol so far in the current financial year, despite prices been market driven for over one-and-a-half years now.
The revenue losses of public sector oil marketing companies have increased significantly over the last few months, as international product prices have raised and the rupee weakened against dollar.
"OMCs are facing double volatility...both in regard to value of rupee and price of petrol," the minister said.
Even though PSU oil companies are currently incurring revenue loss of over 3 rupees per ltr on sale of petrol, they have not been able to revise petrol prices for a couple of months due to assembly elections in key states such as Uttar Pradesh.
The three state-owned oil retailers had last increased petrol prices on Nov 4 by around 1.91 rupees per ltr.
According to Butola, international petrol prices were around $109 a barrel in November, but have now risen to about $128 now.
In fact, oil retailers have had to cut petrol prices on two different occasions after November.
Since January, Indian Oil has incurred revenue loss to the tune of 3.6 bln rupees on sale of petrol.

Reddy, however, ruled out deregulation of diesel prices in the near future. "Deregulation of diesel in entirety is very difficult proposition, but at appropriate time we may look at reducing the subsidy on diesel. But that time may not have come just now," he said.
State-owned oil companies are currently incurring revenue loss of 11.35 rupees per ltr.
On the country's refining capacity, Reddy said it is expected to reach 240 mln tn per annum by 2013 from 186 mln tn currently.
"With two new grass root refineries coming up in Bhatinda and Paradip, India's capacity is poised to reach 240 mln tn per year by 2012-13," he said.
Shares of IOC on Tuesday ended at 273.95 rupees on the National Stock Exchange, down 0.7% from close Monday. Shares of BPCL were up 1.5%, while HPCL shares ended up 0.5%.