Is petrol price hike justifiable when oil firms are making profits?

GN Bureau | May 29, 2012



Last week, when petrol prices were raised, we were told that oil companies were running in huge losses. Yet, yesterday, Indian Oil Corporation (IOC) reported that its net profit rose to Rs 12,670.43 crore in the January-March quarter from Rs 3,905.16 crore a year earlier. Its chairman said the company got Rs 45,484 crore in subsidy from the government to make up for losses it incurred on sale of diesel, domestic cooking gas (LPG) and kerosene below cost during 2011-12.

So, are oil marketing companies making profits or suffering from losses which require petrol price hikes? When these companies are making such profits, is the latest (and highest) hike justifiable?

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