Petrol price hiked by Rs 1.65/litre
New Delhi, Sep 1: Petrol has become costlier by Rs 1.65 per litre over the last fortnight as fuel retailers have raised its rate to Rs 82.08 since August 15. The prices of diesel have remained unchanged over the last month at Rs 73.56 a litre.
Initially, retail prices of both petrol and diesel remained frozen for the first 15 days of August at Rs 80.43 and Rs 73.56 in Delhi. Petrol prices started increasing from August 16 with 14 paise a litre hike that day. Thereafter, petrol rates increased gradually.
Over the last fortnight, petrol prices were revised about a dozen times even as international rates did not fluctuate much as benchmark Brent crude remained in the range between $45.4 and $45.9 per barrel. On Tuesday, Brent crude opened at $45.60 per barrel and was trading at $45.86 a barrel, 1.28% up from Monday close of $45.28 per barrel.
India, which imports over 80% of crude oil it processes, and pays in dollar, has also seen a marginal 0.8% softening of its cost of imports in the last one fortnight. India’s average crude oil purchase cost (the Indian basket) that also factors in rupee-dollar exchange rate, was at Rs 3,268.13 per barrel on August 31.
An oil ministry official said diesel and petrol prices in the country are linked to the international prices of finished products, and not crude prices. The government has no role in the daily revision of petrol and diesel rates as they are deregulated products, he said requesting anonymity. The government had deregulated petrol pricing in 2010 and diesel in 2014.
State-run fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – declined comments on the matter.
SC Sharma, an energy expert and a former officer on special duty at the erstwhile Planning Commission, said in August international diesel prices moved up by a marginal 0.05%, but petrol prices have seen volatility in the month on the upward side between about 5% and 7%. “Hence, diesel prices were kept constant without change, while the petrol prices were increased in line with volatility,” he said.
“Rupee has also improved during the month (August). It is understood that the impact of rupee strengthening has been factored in petrol prices,” he added.
As India pays oil import bills in dollars, appreciation of the rupee against dollar helps in reducing the import cost.
The Delhi government in July reduced value-added tax on diesel by over Rs 8 per litre, making it cheaper than petrol.
Dilip Khanna, transactions partner (oil and gas) at consulting firm EY, previously known as Ernst and Young said, while the excise component for both fuels is almost similar, the pump rates of the two fuels differ because of differences in state levies. He said that petrol prices have lower impact on the inflation compared to diesel.
Gagan Dixit, vice president at equity research firm Elara Capital, said the 15-day average international petrol (gasoline) prices increased $2.5 per barrel that resulted the increase in gasoline cost to companies, which is passed to consumer. Unlike gasoline, 15-day average international diesel prices decreased $0.5 a barrel that resulted in Rs 0.45 per litre decrease in diesel cost to the companies, but they kept diesel prices unchanged, he added. Hindustan Times