The Railways' freight hike decision on Wednesday would mean Rs 0.12 – Rs 0.15 a litre increase in auto and cooking fuel prices, if the public sector oil retailers are allowed to do so. This would be over and above the contemplated hike that the retailers are pushing for. They are seeking a minimum of Rs 5 a litre increase in petrol price.
With this freight hike, the loss on selling the products below the market price will further increase, industry sources said. Currently, the oil marketing companies are losing Rs 13.55 a litre on diesel, Rs 29.97 a litre on PDS kerosene, and Rs 439 a cylinder on domestic LPG. Petrol is being sold at about Rs 5 a litre below cost, sources said.
Petrol, which in book has been deregulated, continues to be artificially controlled. The public sector oil retailers — Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation — are already taking a hit on their profitability due to selling diesel, kerosene under public distribution system, and domestic LPG at a controlled price.
The retailers sourcing from on-land refineries will have to bear the burden of an additional increase of Rs 0.12-Rs 0.15 a litre because of this hike, as they cannot pass it on to the consumers without Government nod.
Subsequent to the freight hike, product prices have been increased at the refinery gate, official sources said. This price excludes dealers' commission and VAT and other duties. The on-land refineries include Indian Oil Corporation's Guwahati, Baroda, Barauni, Mathura, Digboi, Panipat, Bongaigaon, Bharat Petroleum Corporation's Bina Refinery, and Numaligarh Refinery, as well as HPCL-Mittal's Bhatinda refinery.
Currently, in Delhi, the price at which public sector retailers buy their diesel is Rs 42.20 a litre, but it is sold at Rs 40.91 a litre. While refinery gate price for kerosene in Delhi is Rs 41.10 a litre, it is sold at Rs 14.83 a litre, and domestic LPG is procured at the refinery gate at Rs 679.96 a cylinder but sold at Rs 399 a cylinder.
For petrol, which is a decontrolled product, the refinery gate price is Rs 41.37 a litre and it is sold at Rs 65.64 a litre.