The marginal hike in rate follows reductions last month -- Rs 2.02 per litre on June 3 and Rs 2.46 a litre on June 29. The twin price cuts followed the massive Rs 7.54 per litre increase in rates, the biggest in the history, effected in May. Today`s increase was "necessitated due to increasing international oil prices and movement in INR-USD exchange rate," Indian Oil Corp, the nation`s largest fuel retailer, said in a statement.
Average price of Indian basket of crude is USD 101.28 per barrel while international petrol price is USD 111.59 a barrel. The Rupee-USD exchange rate is around Rs 55.36 to a dollar. "At these levels, the oil companies are incurring losses of about Rs 1.41 per litre on petrol sales in the domestic market. However, as the price movement is quite volatile, it has been decided that an increase of Rs 0.70 per litre ..," it said.
In Mumbai, petrol price has raised by Rs 0.88 to Rs 74.24 per litre, while it will cost Rs 73.61 a litre in Kolkata from tomorrow compared to Rs 72.74 per litre currently. Chennai saw a hike of Rs 0.89 per litre in price to Rs 73.16 a litre. State-owned oil firms have now abandoned the practice of revising rates of petrol on 1st and 16th of every month and from now on will do so on a random date so as to deter petrol pump dealers building positions.
Petrol pumps at some places run dry as owners stop taking supplies from companies if a reduction in price is anticipated. Similarly, if an increase in rate is expected, pump dealers start hoarding supplies. IOC said the three state-owned oil marketing firms are projected to lose a record Rs 160,000 crore in revenue on sale of diesel, domestic LPG and kerosene, whose rates have not been revised in over a year now.
Today`s price hike was necessitated as international rate for gasoline, against which domestic petrol prices are benchmarked, has risen from USD 106.93 a barrel at the time of last reduction to USD 111.59 per barrel. Value of rupee against the US dollar has also been a big dampener. Rupee has devalued to Rs 55.36 to a US dollar from Rs 54.96 to a US dollar, making imports costlier. IOC said the company had lost Rs 1,053 crore during current fiscal on not being able to raise petrol rates in line with the cost in the first two months of current fiscal.
For industry (IOC plus Bharat Petroleum and Hindustan Petroleum) the loss comes to Rs 2,323 crore on a commodity whose pricing was freed by the government in June 2010. "In addition, oil marketing companies are suffering high level of revenue losses on the three sensitive petroleum products, namely diesel, kerosene and cooking gas (LPG)," IOC said in the statement.
Oil firms are losing Rs 10.01 a litre on diesel, Rs 27.20 per litre on kerosene and Rs 319 per domestic LPG cylinder. "At these rates, it is estimated that under-recovery (or revenue loss) on sale of sensitive products during 2012-13 shall be around Rs 86,000 crore (for IOC) and Rs 160,000 crore for the industry," it added.