New Delhi State-owned fuel marketers IOC, HPCL and BPCL on Thursday ruled out an immediate rollback of the steepest petrol price increase of R7.5-R8 a litre from Thursday night but conceded that if the government instructs them to cut prices, they have no other go but to follow their majority shareholder. They also indicated that if petrol price falls in world markets or rupee strengthens against the dollar this fortnight, the resultant gain shall be passed on to the consumer by way of a price cut. The government in the meanwhile, ruled out any meeting of the empowered group of ministers on oil companies’ under-recoveries this week to consider price increases in diesel, LPG and kerosene. Opposition parties are already sharpening knives to take on the government on the petrol price hike. While the NDA announced a Bharat Bandh call on May 31, the Left parties have decided to observe an ‘All India Protest Day’ the same day that will include strikes, picketing, demonstrations, rasta roko and rallies. HPCL chairman & MD S Roy Choudhury told reporters at a hurriedly called press briefing that companies are closely watching the movement of petrol price in world markets and the rupee-dollar exchange rate. “Probably on June 1, there could be a price revision. The trend is such that the revision could be downwards.” The import parity price of petrol and the rupee dollar exchange rate in a given fortnight form the basis for the applicable price for the next fortnight. IOC chairman RS Butola said the companies waited for government compensation for the losses made on selling petrol below global prices. But the compensation sanctioned last week for the fourth quarter of last fiscal (R38,500 crore) did not include any assistance towards petrol or towards the higher interest payment due to delayed subsidy receipts. “How far can we sell petrol below our cost price? There is a limit,” said Butola. He, however, said in reply to a question that it has to follow if the government asks the company to cut prices. “Government is our majority owner. If an instruction comes, we have to follow. It is part of our articles of association,” he said. The IOC chief also said if petrol price was not raised in line with the global trends, banks would have stopped extending more credit. “Our borrowing has gone up to R86,000 crore,” he said. In the absence of bank credit, retail fuel supply could be affected, he said. The government wants to urgently raise the prices of other regulated fuels such as diesel and LPG too. The idea is to cut some of the wasteful subsidy expenditure so that the fiscally stressed government can sustain the spending for social sector schemes in the run-up to the 2014 elections. Congress leaders will of course fathom how tolerant is allies like Trinamool Congress are before sitting across the table to consider a price revision in the auto and cooking fuel. Companies are now losing R13.6 a litre on diesel, R31.4 a litre on kerosene and R479 per LPG cylinder. Crisil Research said in order to limit government subsidies, a 10-15% increase in the prices of diesel, LPG and kerosene is more critical. By further widening the gap between petrol and diesel prices, the price hike is expected to increase ‘dieselisation’ in the passenger car market, it said in a report. FE had reported on March 18, quoting Pranab Mukherjee, that if subsidy outgo threatens to exceed the projected levels in the coming years, “mid-course corrections” shall be made. The finance minister had pledged in his Budget for 2012-13 that subsidy outgo would be limited to under 2% of the GDP in the current fiscal. With the OMCs expected to incur a loss of R1,86,000 crore from selling fuel below cost this fiscal, the government has no other way but to pass on some burden to the consumer. The government’s confidence in being able to cut major subsidies stems from the fact that the country was able to push through major reforms in 1991 when the government did not have clear majority on either of the house of the Parliament. Although the crude oil prices (Indian basket) have softened in the recent weeks to $105 a barrel from the last fiscal’s average of $113, the rupee’s steep fall has limited the benefit of that to the oil marketers. Companies do not have the freedom to raise the price of the regulated products diesel, LPG and kerosene without the clearance of the cabinet. Of the total under-recovery of Rs 1,86,000 crore expected this fiscal, more than half would be by IOC alone.