Fuel prices see another spike after assembly elections
State-run fuel retailers increased the petrol price by 15 paise and diesel by 18 paise per litre on Tuesday for the first time in over two months, days after the assembly election process in four states and a Union territory ended last week.
Petrol in Delhi was being sold at Rs.90.55 per litre and diesel at Rs.80.91 a litre on Tuesday, according to India’s largest fuel retailer, Indian Oil Corp. Fuel prices differ across the country due to variations in state levies.
State-owned oil marketing companies (OMCs) could no longer hold pump rates of petrol and diesel as international prices have soared, two executives working in different OMCs said, requesting anonymity.
India’s average crude oil purchase price jumped over 7% at Rs.4,874.52 a barrel in about two months.
According to the executives, petrol and diesel rates will continue to move north marginally in the coming days unless international oil prices fall substantially. “Revenue losses of OMCs are much higher compared to the hike. But the past revenue losses would be gradually recovered,” one executive said.
HT on April 28 reported that retail prices of auto fuels would increase after polls. Petrol and diesel prices had not increased since February 27 on account of the assembly elections.
Retail fuel prices were expected to rise as the state-run fuel retailers had been losing about ₹3 per litre on the sale of the fuel because of higher international oil rates and depreciation of rupee against the dollar.
Both international oil prices and exchange rates affect the import of crude oil. The average exchange rate for purchasing crude oil was Rs.72.29 to the dollar about a month ago compared to Rs.74.18 now. At the same time, the average price of crude oil has jumped by about $8 a barrel. Benchmark Brent crude was hovering around $67.64 per barrel on Tuesday, 0.12% up from the $67.56 a barrel closing price on Monday.
India imports over 80% of crude oil and pays in dollars.
OMCs often change pump prices of fuel every day. While prices of petrol and diesel have been reduced marginally (four times) since February 27, a day after the Election Commission of India announced assembly polls, there had not been any price increase during this 66-day period. The last price reduction took place on April 15.
Officially, oil companies are free to align petrol and diesel rates every day in line with international oil markets. The government, however, manages pump prices of the two fuels through state-run retailers — IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)—that control almost 90% of the domestic fuel retail market