State-run oil companies raise fuel rates for the 26th time in 46 days
Even as international oil prices moved downward, state-run oil companies raised fuel rates for the 26th time in 46 days, making petrol costlier by 27 paise per litre and diesel by 28 paise on Friday. The latest price revision saw petrol crossing ₹100 a litre mark for the first time in Bengaluru, the second metro after Mumbai.
Benchmark Brent crude that fell by 1.76% at $73.08 per barrel on Thursday, and softened further by 0.9% on Friday early trade at $72.42 a barrel. Domestic fuel retailers align pump prices of petrol and diesel with respective international benchmarks of previous day, which often move in tandem with crude oil rates.
Both petrol and diesel rates have crossed the ₹100-mark in several cities as highest fuel rates are recorded in Rajasthan’s Ganganagar, where petrol is sold at ₹108.07 per litre and diesel at ₹100.82 a litre on Friday.
The latest hike has made petrol costlier by ₹6.53 per litre and diesel by ₹6.96 per litre across the country since May 4, a day after results of five assembly polls were declared.
Petrol in Delhi is now sold at ₹96.93 per litre and diesel at ₹87.69 a litre. 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.
The financial capital has the highest fuel rates among metros where petrol is currently sold at ₹103.08 per litre in Mumbai and diesel at ₹95.14 a litre.
The unidirectional upward movement since May 4 saw petrol breaching the ₹100-mark in various cities across the country, particularly in Maharashtra, Rajasthan, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana and Ladakh.
Some of the cities selling petrol for over ₹100 per litre are Mumbai, Ratnagiri, Parbhani, Aurangabad, Jaisalmer, Ganganagar, Banswara, Indore, Bhopal, Gwalior, Guntur, Kakinada, Chikmagalur, Shivamogga, Hyderabad and Leh.
Surging international oil rates and exorbitant domestic tax structure are two key reasons for high rates of petrol and diesel in pumps.
Pump prices of fuels are also high because of taxes. In Delhi, central levies account for 34.8% of petrol’s price and state taxes, 23.08%, according to an official data of June 1. On diesel, central taxes are over 37.24% while state taxes are about 14.64%. 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.
Even as international oil prices saw volatility in last one month, pump rates of auto fuels in India moved only in the upward direction. For instance, despite Brent crude had plunged to $65.11 on May 20, the lowest in these 46 days; petrol and diesel rates went up the next day by 19 paise per litre and 29 paise a litre respectively.
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.
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.