Quantum not fixed, but expect another hike in 15 days: IOC

Speaking about the authorization to hike prices, PK Goyal, chairman, IOC said the quantum of hike has not been directed by the government.
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Jan 18, 2013, 12.27 PM | Source: CNBC-TV18

Quantum not fixed, but expect another hike in 15 days: IOC

Speaking about the authorization to hike prices, PK Goyal, chairman, IOC said the quantum of hike has not been directed by the government.

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Quantum not fixed, but expect another hike in 15 days: IOC

Speaking about the authorization to hike prices, PK Goyal, chairman, IOC said the quantum of hike has not been directed by the government.

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As per the government policy, definitely the government's stand is a very positive sign. We are hopeful that we will be able to increase our prices.

- PK Goyal (Director Finance)

The quiet manner in which the government has allowed oil marketing companies to raise diesel prices has upped investor sentiment, which led to a rally in the stock market. IOC jumped 15 percent in the morning trade after a 7 percent rally yesterday. The government has, however, not decided on the quantum of the hike per month, although reports suggest it will be 50 paise per month.

Speaking about the authorization to hike prices, PK Goyal, chairman, IOC said he hopes to raise prices regularly, but the quantum of hike has not been directed by the government. Goyal said IOC will revise diesel prices either fortnightly or monthly. "Another hike can be expected by next fortnight," he said. The IOC chairman clarified that deisel has been deregulated for bulk consumers like the Railways

The company's total underrecovery is expected to touch Rs 9600 crore on account of the rise in LPG Cap. In order to sweeten the bittel deisel price hike pill, the government had simultaneously raised the cap on subsidised LPG cylinder from 6 to 9  a year.

Here is the edited transcript of the interview on CNBC-TV18.

Q: There is a big rally in your stock, about 13 percent today on the hope that you will be able to raise diesel prices by a small quantum every month. Are you confident that you can go ahead and do that because earlier, with the supposed petrol deregulation, oil marketing companies could not raise prices quite freely? Do you think starting next month you can do it for diesel?

A: As per the government policy, definitely the government's stand is a very positive sign. We are hopeful that we will be able to increase our prices according to the directives of the Ministry of Petroleum.

Q: Will you need clearance from the government every month to effect these increases according to what you have understood?

A: I don’t think any such approvals are required.

Q: You have an express initiation by the government that you can indeed increase prices every month by a particular amount?

A: It is not a particular thing. Depending upon the situation, we can go ahead with the price increases. There is no specific quantum at this moment.

Q: You have also had to increase the cap on subsidised cylinders. Just in order to balance that out, how much would you need to increase diesel prices by?

A: That has not been worked out but, the total under recovery increase with a hike in the cap will be roughly around Rs 9,000 crore in a year.

Q: I am just a little unclear about what you just said because you said that the diesel price hike every month will depend on the situation. But, the situation is that the under recovery today is Rs 9 to 10.

A: At this moment, the under recovery is Rs 9.60 which has come down by Rs 9.15. Definitely, we are going to increase the prices, from time to time, as directed by the Ministry of Petroleum.

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