Thursday, July 2, 2009

Govt hikes petrol prices by Rs 4/ltr, diesel by Rs 2/ltr

Government has hiked the petrol prices by Rs 4 per litre and diesel by Rs 2 per litre to cut losses of oil companies in view of rising global oil rates.

"The hike was necessitated because of rising international crude oil prices which have doubled to USD 70 a barrel since December," Petroleum Minister Murli Deora told reporters here. Deora only consulted party leadership and Prime Minister Manmohan Singh to decide on the hike. Usually, the fuel price revisions are referred to the Cabinet.

Parliament's Budget session is to begin tomorrow and clearly the government wanted to take a decision before that. The weekly Cabinet meeting is scheduled for tomorrow.

Deora said the government will not raise the domestic LPG and kerosene prices though the public sector oil companies are losing Rs 92.96 per cylinder and Rs 15.26 a litre respectively.

After the increase, petrol in Delhi will cost Rs 44.62 a litre and diesel Rs 32.86 a litre.

Petroleum Secretary R S Pandey said this was an "ad-hoc" increase in fuel prices aimed at limiting the Rs 170 crore per day loss Indian Oil, Bharat Petroleum and Hindustan Petroleum incurred on sale of petrol, diesel, domestic LPG and kerosene.

The "ad-hoc" nature of the price increase suggested that there would be no deregulation of auto fuel prices.

Public sector oil companies have seen losses on fuel sale widening to about Rs 170 crore per day on firming global oil prices and may end the fiscal with over Rs 49,000 crore in revenue loss.

Indian Oil, Bharat Petroleum and Hindustan Petroleum have seen losses on sale of petrol, diesel, domestic LPG and kerosene inflating from Rs 130 crore to about Rs 170 crore per day, an industry official said.

The three firms calculate the desired retail selling price of the four government-controlled products on 1st and 16th of every month based on average international oil rates of the previous fortnight.

The firming international crude oil prices, which are at a seven-month high of about USD 73 per barrel, widened losses on petrol to Rs 6.94 per litre from Rs 6.08 per litre in the second half of June. On diesel, the losses have soared to Rs 4.11 a litre against Rs 2.96 previously.

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