Petrol rate crosses record ₹85/litre in Delhi; diesel above ₹75/litre
Petrol price on Tuesday crossed ₹85 per litre in Delhi, beating its own record for the fifth time in less than two weeks since January 7 even as India’s average crude oil import price softened a bit, according to official data.
Petrol and diesel have become costlier by 25 paise per litre each on Tuesday, raising their pump rates in Delhi to ₹85.20 per litre [all-time high] and ₹75.38 per litre, respectively. Diesel surged to a record ₹82.13 per litre in Mumbai, according to state-run Indian Oil Corporation (IOC). Petrol is sold at ₹91.80 per litre in Mumbai. Retail rates of the two auto fuels vary across the country because of differences in local levies.
According to IOC, the largest fuel retailer in the country, petrol and diesel rates have been revised upward by ₹1 per litre each after January 7 in four small doses of 25 paise each, on January 13, January 14, January 18 and January 19.
Official data shows that India’s average crude oil import price [Indian basket] was ₹3,977.18 per barrel on January 7 this year when petrol price in Delhi had jumped to an all-time high for the first time after about 27 months to ₹84.2 per litre, beating its previous record of ₹84 per litre on October 4, 2018.
Even as the current price of Indian basket of crude is ₹3,972.74 a barrel, marginally lower than the January 7 figure, the retail prices of automobile fuels were raised. The price of Indian basket of crude oil represents actual average import cost that also factors in the rupee-dollar exchange rate. India, that imports more than 80% of crude oil it processes, pays the import bill in dollars.
Requesting anonymity, a government official said oil marketing companies enjoy pricing freedom. They align pump prices of auto fuels daily with their respective international benchmarks, which may not necessarily move in tandem with international crude oil prices. According to Indian refiners, crude constitute about 90% of the refining costs.
State-run oil marketing companies – IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – did not respond to email queries. The three companies enjoy monopoly in fuel retail.
International oil prices that had plunged below $20 a barrel on April 21, 2020, because of rapid spread of Covid-19 pandemic and its devastating impact on the global economy, is on a surge especially in the backdrop of vaccination programmes in various economies. Benchmark Brent crude that closed at $55.1 a barrel last week [Friday], was weak on Monday at $54.75 per barrel. Brent crude, however, gained 55 cents in the early trade on Tuesday to $55.30 a barrel on optimism of economic recovery from Covid-19 pandemic.
An executive of a state-run oil company said requesting anonymity that the Centre and states must reduce excise duty and value-added tax on the two fuels to provide relief to the people. Petrol in Delhi attracts over 62% taxes that include ₹32.98 per litre central excise and ₹19.55 a litre VAT. Similarly, levies on diesel are in excess to 57% ( ₹31.83 per litre central excise and ₹10.99 per litre VAT).
The Opposition hit out at the government for excessive taxes on auto fuels. Congress leader Randeep Singh Surjewala said in a tweet that “petrol and diesel are costliest in 73 years” and accused the government of mopping up “ ₹19 lakh crore in six years” by raising taxes on auto fuels. The ministry of petroleum and natural gas did not comment on this matter.
There has been a demand to reduce taxes to provide relief to consumers, but the government is not in a position to forego easy revenues at a time when it needs huge funds to fight the pandemic and revive the economy, one official said requesting anonymity. “Now, there is no pressure of inflation as retail inflation eased to a 15-month low, at 4.59%, hence the government would like to wait till Budget on reducing excise duty on fuel. However, a final decision will be taken by the competent authority,” he added.
The retail inflation, as measured by the Consumer Price Index (CPI), was a 77-month high at 7.6% in October. Although it had soften a bit to 6.9% in November, it was still above the Reserve Bank of India’s (RBI) medium-term target of 4%, with a band of plus or minus 2%.