In what will add to the inflationary pressure — already touching the danger mark — state-owned oil firms on Thursday announced a Rs 3.14-a-litre petrol price hike, but left the diesel prices untouched for now.
The reason: the rupee touched a two-year low against the dollar, increasing the cost of importing crude. This is, however, the second petrol price hike in four months. The last price hike of Rs 5 a litre was on May 15 — the steepest so far.
Petrol will now cost Rs 66.84 a litre against Rs 63.70 in Delhi from midnight.
“Indian Oil Corp (IOC) has been constrained to revise the price of petrol,” said a statement from the company — India’s largest oil refining and marketing firm.
The current price, the company said, corresponded to the crude price of about $103 a barrel. But the price is hovering around $110-111 a barrel now, while the rupee fell to 48 a dollar on Thursday for the first time since September 2009.The three state-owned oil firms — IOC, BPCL and HPCL — lost Rs 2,450 crore this fiscal on selling petrol below cost. They are losing Rs 263 crore a day on diesel, domestic LPG and kerosene.
Diesel is being sold at a subsidy of Rs 6.05 a litre and kerosene at Rs 23.25 a litre, while domestic LPG rates are under-priced by Rs 267 a 14.2-kg cylinder.
“Although this may add a bit to inflation, the alternative scenario of not hiking would mean a further increase in the fuel subsidy bill borne by the government, resulting in additional borrowings by the government,” said CII director general Chandrajit Banerjee.
An oil company official said, “We were losing Rs 2.61 a litre or Rs 15 crore a day on the sale of petrol. After adding sales tax or value-added tax, the hike needed to level the domestic prices with the international prices came to Rs 3.14 a litre in Delhi.”