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The oil marketing companies could easily afford to bring down the price of petrol by at least Rs 2-2.50 per litre, says Narendra Taneja, energy expert.
The companies could easily afford to bring down the price of petrol by at least Rs 2-2.50 per litre
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The oil marketing companies (OMCs) could easily afford to bring down the price of petrol by at least Rs 2-2.50 per litre, says energy expert Narendra Taneja.
Talking to CNBC-TV18, he says that petrol accounts for nearly 10 percent of total petroleum products of these companies, which have not increased the price of diesel as was expected. So, the result is that in a way, petrol consumers are being asked to subsidise diesel consumers.
Here is the edited transcript of his interview with CNBC-TV18
Q: What do you make of oil marketing companies and petrol pricing because international crude prices are down from USD 119 to USD 116. That is what they factored in when they decided to cut petrol prices last night. The rupee has depreciated at the fortnight ending the April 15 only about Rs 0.77, yet only a Rs 1 price cut?
A: Honestly, it is not justified. The companies could easily afford to bring down the price of petrol by at least Rs 2-2.50 per litre. However, don’t forget one thing. Petrol accounts for nearly 10 percent of total petroleum products of these companies and they have not increased the price of diesel as was expected. So, the result is that in a way, petrol consumers are being asked to subsidise diesel consumers. So, that has been the practice and that has been the policy for a long time, which unfortunately seems to be continuing. However, left only to petrol, I think that they could easily afford to reduce the price as I said earlier by Rs 2-2.50 per litre and ideally they should have done it.
Q: Let me talk to you about what is happening on the bulk diesel front because OMCs are suppose to charge bulk diesel consumers market rates. Yet, OMCs are not tweaking prices with the international crude prices or even with the Indian basket. The Indian basket today down to below USD 100 a barrel for the first time since June 2012 so why should bulk consumers not get the benefit, why do they need to wait for a fortnight to avail of this benefit and you don’t know what is going to happen in the interim?
However, having said that, I personally feel that unless we go for a complete deregulation of diesel in true sense of the term these ambiguities, these issues, these problems would remain, because companies are not empowered and at the same time there is not enough literacy on the part of some of the bulk consumers and for that matter other consumers. That is why sometimes you see this ambiguity and you see that bulk consumers are in the process of losing.
Q: As per your calculation, what is the current under recovery and what is your projection for the year end figure?
HPCL stock price
On October 31, 2014, Hindustan Petroleum Corporation closed at Rs 529.65, up Rs 7.30, or 1.40 percent. The 52-week high of the share was Rs 535.70 and the 52-week low was Rs 199.00.
The company's trailing 12-month (TTM) EPS was at Rs 95.69 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 5.54. The latest book value of the company is Rs 443.31 per share. At current value, the price-to-book value of the company is 1.19.
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