Over Rs 2 per litre hike in petrol price on cards
New Delhi: A hike of about Rs 2.10-2.13 per litre in petrol price is needed because of weakening Indian currency, but oil companies are unlikely to revise rates today as scheduled and instead may do so on Monday. State-owned oil companies, as per practice, revise rates of petrol on 1st and 16th of every month based on the average imported price and exchange rate during the fortnight.
As per this schedule, new rates were to be announced today if they were take effect from tomorrow, but top officials at oil companies said the revision is "99 per cent unlikely today". The oil companies, they said, will decide on revising rates only on Monday. The rate change may, however, need a political clearance as Assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced.
"While international price of gasoline (against which domestic petrol prices are benchmarked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to about Rs 53 to a US dollar," an official said. This warrants an increase of Rs 1.78 per litre and after adding local sales tax or VAT, the desired hike in petrol price in Delhi is Rs 2.10-2.13 a litre. Petrol at Indian Oil Corp and Bharat Petroleum Corp petrol pumps in Delhi is now priced at Rs 65.64 per litre and at Rs 65.65 a litre on retail outlets of Hindustan Petroleum Corp.
Oil firms had, at the last review on December 15/16, decided not to burden the consumers with about Re 1 per litre hike in petrol price needed at that time, as they felt Reserve Bank`s intervention may help arrest fall in rupee`s value. The oil firms had in November cut petrol prices twice on drop in international oil rates. The companies reduced petrol prices by Rs 2.22 per litre, or 3.2 per cent, from November 16, followed by a Rs 0.78 per litre cut from December 1.
The domestic rates, which were last revised on November 30, are pegged at Rs 51.50 to a US dollar exchange rate. The average exchange rate in first fortnight of December was Rs 51.98 to a US dollar, which has further deteriorated. State-owned oil companies like Indian Oil Corp (IOC) use fortnightly average of benchmark oil price and exchange rate to revise retail rates on 1st and 16th of every month. The revision was due today and if the oil companies had decided to pass on the exchange rate fluctuations to consumers, the new rates would have been effective from January 1.
However, it remains to be seen if the oil firms will get a political nod to increase the prices in view of assembly elections. Petrol price was freed from government control in June last year but public sector companies continue to informally consult their parent Oil Ministry before taking a decision. The government continues to control rates of diesel, domestic LPG and kersoene which were sold way below cost to keep inflation under check. The oil firms lose Rs 12.71 per litre on diesel, Rs 29.93 a litre on kerosene and Rs 326 per 14.2-kg LPG cylinder.