In what will substantially increase commuting costs, state-owned oil companies on Saturday increased petrol prices by Rs 5 per litre.
Effective Saturday midnight, the hike in petrol prices is the steepest so far. The last revision was made in January, when the price was increased by Rs 2.50 per litre.
Petrol in Delhi will now cost Rs 63.37 per litre compared to the previous Rs 58.37 per litre.Hindustan Times had first reported in the last week of April that a fuel price hike would be announced soon after the assembly elections in five states.
The hike, which oil firms had put on hold since January even though crude oil had touched a two-and-a-half-year high, came a day after election results in the five state were announced.
While prices of diesel and cooking gas (LPG) have been left untouched for now, government sources said the petrol price hike is likely to be followed by a Rs 4-per-litre increase in diesel rates and Rs 20-25-per-cylinder hike in LPG prices later this month.
An empowered group of ministers (EGoM) under finance minister Pranab Mukherjee will meet soon to decide on the quantum of hikes of diesel and LPG.
The petrol price surge will directly impact household budgets — already pummeled by soaring prices of essential food items and commodity prices. The move is also certain to fuel inflation.
Oil companies are losing Rs 18.19 per litre on diesel and R329.73 per 14.2-kg cylinder of liquefied petroleum gas. Calling it a “moderate” increase, chairman and managing director of the country’s largest fuel retailing firm,
Indian Oil Corporation (IOC), RS Butola, said, “Even after this increase, we are still losing R5.50 per litre on petrol.”
“Against a desired price of Rs 10.50 per litre of petrol, IOC has effected a reduced price increase of only R5,” he said. The government had in June last year freed petrol prices from its control but oil companies continued to follow informal advice from the oil ministry on rate revisions.
Despite global crude prices touching over $120 a barrel, the oil companies were not allowed to raise prices since January in view of elections in states such as West Bengal, Tamil Nadu and Kerala.
“Petrol is a rich man’s fuel and the increase in its price was needed due to rising global crude oil prices,” said a senior petroleum ministry official, justifying the hike.