13th price hike makes petrol, diesel costlier by over ₹3/litre in May
Pump rates of auto fuels created another record on Tuesday as state-run oil companies raised petrol price by 23 paise per litre and diesel by 25 paise, the 13th hike in 22 days, making petrol costlier by ₹3.04 a litre and diesel by ₹3.59 since May 4, a day after results of five assembly polls were declared.
Petrol, which has crossed the ₹100 per litre mark in several cities, is also on an all-time high at ₹99.71 a litre in Mumbai. Diesel is sold at record ₹91.57 per litre in the financial capital. With the latest hike, pump prices of petrol and diesel in Delhi surged to a new record of ₹93.44 per litre and ₹84.32 a litre, respectively.
While fuel rates in Delhi are the benchmark for the entire country, retail prices of the two fuels differ from place to place because of variations in state taxes and local levies.
Consumers in several cities and smaller towns, particularly in Rajasthan, Maharashtra and Madhya Pradesh are paying more than ₹100 for a litre of petrol. Some of the cities selling the fuel over ₹100 per litre are Ratnagiri, Parbhani, Aurangabad, Indore, Bhopal, Gwalior, Jaisalmer, Ganganagar and Banswara.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps. Global oil prices surged on demand optimism and a snag on the possibility of lifting the US sanction on Iranian crude supply. Benchmark Brent crude, which rose over 3% to $68.46 a barrel on Monday, surged 0.32% further to $68.68 per barrel on the Tuesday early trade. Indian fuel retailers align pump prices of petrol and diesel with their international benchmark rates of previous day.
Pump prices of fuels are also high because of taxes. In Delhi, central levies account for 35.5% of petrol’s price and state taxes, 23%, according to an official data of May 16. On diesel, central taxes are over 38.2% while state taxes are about 14.6%. Through 2020, as global crude prices fell, the central government raised excise duty on the fuel to shore up its finances. States too followed suit -- with revenues hit on account of the pandemic.
According to executives working in state-run oil marketing companies, pump prices are also high because companies were recovering their past revenue losses like the one suffered for 66 days since February 27 when rates were not raised because of assembly elections in four states and one Union Territory.
During the 66-day pause on rate hike, state-run retailers had also reduced petrol and diesel rates by 77 paise and 74 paise a litre, respectively, in four small steps. But, the entire gains to the consumers were quickly reversed in the first four consecutive rounds of rate hikes starting from May 4.
HT wrote on April 28 that fuel rates would incrementally move north after polls as state-run fuel retailers were losing about ₹3 a litre on fuel sales due to higher international oil rates at that time apart from depreciation of rupee against the dollar. India imports more than 80% of crude oil it processes and pays in dollar.
The government deregulated the pricing of petrol on June 26, 2010 and diesel on October 19, 2014. Accordingly, state-run retailers are free to change pump prices every day. Public sector retailers — IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)— control almost 90% of the domestic fuel retail market.