IOC seeks freedom to fix retail fuel rates

Indian Oil Corporation has asked the government for freedom to fix retail fuel prices and more autonomy in carrying out day to day affairs of the company.

IOC, in the annual performance memorandum it signs with the petroleum ministry, stated that the Navratna oil companies should be granted freedom to fix retail selling price of petrol, diesel, domestic LPG and kerosene.

The government does not allow oil firms to raise fuel prices in line with cost to keep inflation under check. IOC may see a revenue loss of Rs 23,510 crore (Rs 235.1 billion) on selling petrol, diesel, domestic LPG and kerosene below cost in 2009-10.

IOC said pricing freedom was essential to 'prevent erosion in resource base and generate a reasonable amount of surplus to assist in capital formation and to enable redeployment in futuristic projects for maintaining competitive advantage in the trade at a minimum cost of capital.'

The company currently loses Rs 3.63 on sale of every litre of petrol, Rs 2.33 per litre on diesel, Rs 17.15 a litre on kerosene and Rs 158.55 per 14.2-kg domestic LPG cylinder.

IOC also sought autonomy to appoint chief executives and directors of subsidiary companies. "The government should have dealing only at the Board level of the holding company (in this case IOC) and not with the subsidiary companies."