E-Paper
Petrol prices cut marginally for first time after remaining at all-time high for 36 days
Indian Oil Corporation (IOC) pumps are now selling petrol at ₹101.64 per litre in Delhi and diesel at ₹89.07 a litre.
Petrol on Sunday become cheaper by 20 paise per litre for the first time after remaining at record ₹101.84 a litre for 36 days since July 17.
State-run oil marketing companies have also reduced diesel rates on Sunday by 20 paise per litre, the fourth price cut in the last five days, making the fuel cheaper by 80 paise per litre since August 18.
Indian Oil Corporation (IOC) pumps are now selling petrol at ₹101.64 per litre in Delhi and diesel at ₹89.07 a litre.
While fuel rates of IOC 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.
Domestic rates of petrol and diesel have been slashed after international crude oil plunged sharply by 7.66% last week. Benchmark Brent crude that closed at $69.51 per barrel on Monday (August 16) with a 1.5% fall, maintained a downward trend for the entire week.
Brent closed at $65.18 on Friday, the lowest level since May 21 amid worries of surging Covid-19 cases, increased supplies of crude oil in the market from large producers, and demand concerns.
After mid-July, state-run fuel retailers kept auto fuel rates frozen at record levels in a departure from the policy of aligning petrol and diesel rates daily by tactically using minor gains of falling international oil prices to offset the need of raising pump rates.
Ahead of the Monsoon session of the Parliament, the retail price of diesel was frozen first on July 15 at ₹89.87 per litre in Delhi. Petrol followed the suit after two days at ₹101.84 a litre, even as international oil prices saw wide fluctuations. The Monsoon session that started on July 19 ended two days ahead of the schedule on August 11.
Post-session, oil companies first reduced diesel rates on August 18 by 20 paise a litre after it remained frozen at the historical high of ₹89.87 a litre for 34 days. There was some delay in petrol price reduction due to smaller revenue margin on it, an executive working for one of the state-run oil marketing companies (OMCs) said requesting anonymity.
Three public sector OMCs – IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – enjoy a monopoly in the fuel retail business with about 90% market share.
While international oil prices impact pump rates of auto fuels because India imports more than 80% of crude it processes, steep taxes are the other reason for high rates of petrol and diesel.
In Delhi, central levies account for 32.3% of petrol’s price and state taxes, 23.07%, according to official data of August 1. On diesel, Central taxes are over 35.38% while state taxes are about 14.62%.
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 official data, petroleum sector contributed ₹3,71,726 crore central excise revenue in 2020-21, and ₹2,02,937 crore state levies or value added tax (VAT).
