A day after the Assembly election results, retail price of petrol have been raised by Rs 5 a litre from Sunday.
For the second time this year, public sector oil marketing companies (OMCs) have increased the price of the auto fuel to align the domestic and international prices.
The pump price will vary from State-to-State depending on the local tax component, but petrol will now cost over Rs 63 for a litre in Delhi.
“Despite this increase, the oil companies — Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation — will continue to lose Rs 5 a litre on petrol,” an industry official told Business Line. Another hike in petrol price, therefore, cannot be ruled out.
Expectations are also high that an Empowered Group of Ministers (EGoM) will meet shortly to decide on the diesel price. According to reports, the EGoM would consider raising diesel price by Rs 3-4 a litre.
Meanwhile, in a statement, Indian Oil Corporation said, “Against a desired price of Rs 10.50 a litre in petrol, the company has effected a price increase of only Rs 5 a litre. Despite very high global crude oil prices and a huge debt burden for oil companies, the increase is only moderate keeping the consumers' interest in view.”
Though the Government had allowed the companies to revise the petrol prices on their own, an informal control continued. Government control on diesel, PDS kerosene, and domestic LPG still continues.
However, this increase will narrow the difference between the retail prices of petrol being sold by private players such as Essar and that sold by PSU oil marketing companies by Rs 2 a litre. Earlier, petrol sold by private retailers was dearer by Rs 7 a litre.
The three OMCs incur revenue loss on selling petroleum products at government-controlled prices. Current revenue loss on diesel is Rs 18.19 a litre, on PDS kerosene Rs 29.69 a litre and on every 14.2 kg of LPG cylinder Rs 329.73. For 2010-11, the estimated loss for the companies is about Rs 78,000 crore. For 2011-12, the loss is put at Rs 180,208 crore.
It remains to be seen how well this move of the oil companies will be received by the political parties and the common man, who is already burdened with the rising food prices.