Will the Centre allow public sector oil retailers to increase diesel and petrol prices from May 1, with the country still in election mode?

There is uncertainty on this count, especially in the case of diesel where prices were not raised by the customary 45-50 paise a litre even for the current month.

As far as petrol goes, public sector oil retailers have been given the freedom to revise prices on a fortnightly basis taking into account the average international price movements and the rupee-dollar exchange. Oil retailers are reportedly seeking a minimum ₹1/litre hike in petrol prices, given rising global crude oil prices.

Between April 1 and April 25, the Indian crude basket has gone up by almost $3 a barrel, reversing a declining trend that had led to petrol prices being reduced twice in the current month alone.

The question now being asked is whether the Government would ‘like’ petrol prices to go up at a time when voting is still on.

Technically, the decision to hike lies with the companies, but whether the Government would permit them to exercise this freedom will be known on April 30 when the companies announce petrol prices for the next fortnight.

Incidentally, the seventh round of polling for Lok Sabha elections also takes place on April 30. The subsequent rounds are on May 7 and May 12.

Regarding diesel, the price revision will depend on the under-recovery (revenues foregone by oil retailers for selling below market prices) to be calculated for end-April, said a Petroleum & Natural Gas Ministry official. The under-recovery on diesel from May 1 is expected to be over ₹6 a litre.

Despite the fact that the Government has allowed the public sector companies to increase diesel rates in small range (45-50 paise) every month, the companies were restrained from hiking prices in April.

On March 31/April 1, while revising the petrol price, the companies had left diesel (retail) prices untouched on the grounds that the under recovery on the fuel was ₹5.93 a litre, which was below the ₹6 a litre – the interim subsidy cap recommended by Kirit Parikh expert group.

Besides, the Ministry also referred the matter to the Election Commission.

Getting flak This decision of the Ministry had drawn flak as the Government had already allowed the oil companies to revise diesel prices in small doses and the Parikh panel recommendations were yet to be adopted.

Most in the industry saw this as a political decision, as diesel accounts for over 40 per cent of local fuel sales.

Diesel is mainly used in road transport, agriculture, industry, and power generation sectors.

So, the question remains whether on April 30 the Centre allow both petrol and diesel prices to be revised.