Petrol prices will not be raised this fortnight as state-owned oil firms apparently could not get political clearance for the over Rs 2 per litre hike in rates needed to achieve parity with the imported cost on account of the weakening rupee.
Indian Oil (IOC) and other state-run firms, which had last month refrained from hiking petrol prices as the government was wary of protests while Parliament was in session, are not raising the rates even this fortnight, a source privy to the development said.
Given the drubbing the Lokpal Bill got in the Rajya Sabha, the government does not want to alienate the Trinamool Congress, the most vocal opponent of fuel price increases within the ruling UPA.
Furthermore, assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced and a hike in petrol prices would have created a "negative image", the source said.
Oil firms, as per the usual practice, revise the rates for petrol on the 1st and 16th of every month based on the average imported price of oil and exchange rates during the previous fortnight. However, they postponed a decision on the hike on December 31 as it was New Year's eve.
Today, the oil firms could not get the "informal political approval" they used to seek from their majority shareholder, the source said.
A hike of over Rs 2 per litre was necessitated because the rupee depreciated to Rs 53.07 per US dollar in the second fortnight of December, based on which the rates on January 1 were to be decided. The average exchange rate stood at Rs 51.98 per US dollar in the first fortnight of December.