Price controls ravaging India’s refiners

08/20/2012
Price caps on key oil products are ravaging the finances of state-owned refiners in India. Two such companies with businesses mostly in refining reported large losses in the most recent fiscal quarter. India’s price-administration system keeps prices of diesel, LPG, and kerosine below market levels, but refiners must pay market prices for crude oil. Gasoline hasn’t been subject to price controls since 2010 but doesn’t account for a large share of India’s fuel mix. In the past, the government compensated refiners for what it calls “under-recovery” on negative-margin sales of those products. Recently, fiscal problems have kept it from doing so, forcing refiners to sustain the losses. Indian...
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