NEW DELHI: With stock prices of all major oil marketing companies (OMC) nosediving after the government asked OMCs to absorb one rupee a litre in costs, eroding market capital, Finance Minister Arun Jaitley on Saturday assured investors that it would not go back to regulating fuel prices.
“Let me categorically assure all that there is no going back on deregulation of oil prices,” Jaitley said in a Facebook post.
On Thursday, the government announced a cut in petrol and diesel by Rs 2.50 per litre to give relief to consumers, out of which government took hit of Rs 1.50 per litre and oil companies had to absorb cost of Rs 1 per litre.
While, the government said it will impact revenue collection by Rs 10,500 crore, according to analysts, oil companies will have to suffer Rs 7,200 crore in losses because of this move. That came as a rude shock for a sector already bleeding from the double whammy of a falling rupee and rising oil prices.
Stocks of oil marketing companies (OMCs) continued to tank in opening trade - diving up to 29 per cent and stocks of major oil companies touched a 52-week low, eroding the market capitalisation by about Rs 1.25 lakh crore in two straight trading sessions. The move was seen as a reversal of a 2014 decision to scrap regulated fuel prices.
As an afterthought, the finance minister on Saturday took to Twitter to allay fears of investors adding that the central government will not go back on deregulation of fuel prices.
This year alone, petrol and diesel prices have been hiked by Rs 13.91 and Rs 15.59 per litre respectively in the national capital. Prices have seen a similar hike in other cities as well.