Petrol Panic!

During the twenty first century the psychologists have been busy finding different phobias and names for these stupid phobias. One new phobia that has bitten almost everyone in the world is Petrolophobia.

This originates when you reach for your bike early in the morning and you find the unholy fuel meter’s hands clicking down to the red of reserves. It has its own benefits you know: for example it will shake you up from your dreams and put you face to face with reality. What is the reality you ask? Well, that oil is thicker than blood, my friends.

Yesterday, when Petroleum Minister Murli Deora sat down on his chair to announce the much awaited, yet neglected and disapproved price rise in petroleum products, I turned off my television. I literally rushed to the nearest petrol pump to have 14 liters of petrol pumped into my bike, the maximum it can hold. Thankfully, I found my nightmare to be a lot less scarier than I had expected! No rationing was introduced in the petrol products, the worst thing that has come to be expected in independent India in recent times!

Also, the increase was much less than I had assumed. The cabinet has reduced the customs duty on crude oil from 5 per cent to nil, and on petroleum and diesel from 7.5 per cent to 2.5 per cent. The customs duty on other petroleum products has been reduced from 10 per cent to 5 per cent. The price of all the products is hiked by about ten per cent. Petrol has been made dearer by 5 Rupees and diesel by 3 Rupees. The domestic LPG gas cylinder has been made unreachable by another 50 Rupees. The prices of the premium versions of petrol and diesel like Xtra-primium, Power and Xtra-mile will be costlier in proportion. Kerosene prices were however, left unchanged. The prices will be effective from 12am, June 5, 2008.

This steep rise in petrol prices came after a huge delay, due to agitations both by BJP and the Left, and also in view of the forthcoming Union elections. The state owned Oil Marketing Companies (OMC’s) were making huge losses, quarter after quarter due to the government’s people friendly approach and diligence in not reducing its tax pie in the petroleum products. The OMCs have so far reported losses of over Rs 2.25-lakh crore due to the high crude prices, and due to the absence of revision in the domestic retail prices. They have said they will run out of cash to import crude oil if the government fails to bail them out. They have been incurring a loss of 21.43 Rupees on sale of every litre of petrol since June 1, 2007. Similarly, the loss on diesel is 31.58 Rupees and kerosene 35.98 Rupees. Losses in LPG have swelled to 352.90 Rupees a cylinder. So much so, that Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) had got resources only to supply petrol till July last week. The most healthy OMC, Indian Oil Ltd (IOL) could have supplied petrol only till September second week. This poor state of our national Oil Marketing Companies was not only shameful but also suicidal in a world, where oil has become a necessity and a sharp economic weapon.

However, increasing the prices of petrol by 10 per cent is not humane. The need of the hour is to make sure that the burden of the losses of the OMCs must not be transferred onto a developing nation’s public, as it reduces its spending capacity. The funds for compensating the loses of OMCs are available, since the public sector oil companies had met the state’s irrecoverable taxes such as Central sales tax, entry tax, through levy of surcharge. The Petroleum Ministry was hence, left with a spare amount of 1,200 crore Rupees in last year’s Budget. Re-allocation of this amount towards subsidy bills of Government-owned OMCs would have marginally reduced the losses incurred by the Government-owned petro-marketing oil companies. The very same OMCs were forced to keep the prices of petrol and diesel at the same level and incur losses, due to political reasons. They ended up incurring losses just so that the government doesn’t seem like its burdening the aam aadmi. This, my friends is democracy for you.

Saurabh Sharma

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