Fuel prices at record high today; Petrol, diesel rates hiked by 25 paise/litre
The upward price movement of auto fuels continued unabated for the seventh time in nine days as state-run oil companies raised their rates by 25 paise a litre on Wednesday to sell petrol and diesel at record ₹92.05 per litre and ₹82.61 a litre respectively in Delhi.
The recent round of price hike made petrol costlier by ₹1.65 per litre and diesel by ₹1.88 a litre since May 4 across the country. Pump prices of petrol and diesel vary from place to place due to different state taxes and local levies.
On Wednesday, many cities of Rajasthan, Maharashtra and Madhya Pradesh (MP) have seen petrol prices going beyond ₹100 per litre. According to Indian Oil Corporation (IOC), petrol is sold at ₹100.97 a litre in Jaisalmer (Rajasthan), ₹100.70 in Prabhani (Maharashtra) and ₹100.08 in Bhopal (MP).
While Mumbai pumps have priced petrol at ₹98.36 a litre and diesel at ₹89.75 today, auto fuels are sold at ₹93.84 per litre (petrol) and ₹87.49 a litre (diesel) in Chennai. The latest price of petrol in Koltaka is ₹92.16 per litre while diesel is sold at ₹85.45 a litre.
According to executives working in state-run oil marketing companies, there are two main reasons for the recent spike in auto fuel prices – high international oil rates and recovery of past revenue losses that companies had occurred for keeping any upward price movement of the two politically sensitive fuels under pause for 66 days since February 27 because of assembly elections in four states and one Union territory. The pump price rally in India started a day after poll results on May 4.
Meanwhile, international oil prices are also firm. Benchmark Brent crude was trading at $68.9 a barrel, about 0.45% up during the intraday session on Wednesday. Pump prices of petrol and diesel in India are aligned to their international benchmarks and often move in tandem. The rupee-dollar exchange rates also have impact on fuel pricing as India imports over 80% of crude oil it processes and pays in dollar.
During the 66-day pause on rate hike, state-run retailers had reduced petrol and diesel rates by 77 paise and 74 paise a litre, respectively in four small doses. But, the entire gains to the consumers were already reversed in the current month.
HT wrote on April 28 that fuel rates would move north after polls and their pump prices would start seeing small increments as state-run fuel retailers had been losing about ₹3 a litre on sale of the fuel because of higher international oil rates and depreciation of rupee against the dollar.
Fuel rates in India is also high because of high central and state taxes. Central and state levies account for the chunk of the retail price of fuel -- in Delhi for instance, central levies account for over 36% of petrol’s retail price, and state levies, 23% but given the parlous state of the economy, especially in the midst of the raging second wave of the coronavirus disease, it is unlikely that those will be reduced. Indeed, the Centre’s move to raise excise even as global oil prices crashed last year, helped boost government revenues.
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)— controls almost 90% of the domestic fuel retail market.