On a day when the rupee hit a new low, petrol price touched a new high. Petrol in Delhi will now cost Rs 73.18 a litre effective midnight with the public sector oil marketing companies raising the prices by Rs 7.54 a litre.

This is the steepest increase that the country has seen. Though petrol prices were deregulated in June 2010, there is an artificial control in place. This is evident by the fact that the increase came just a day after the Budget session of Parliament ended.

After this increase, all eyes will now be on the Ministerial Panel headed by the Finance Minister, Mr Pranab Mukherjee, on whether it will decide on the prices of the regulated products —diesel, PDS kerosene and domestic LPG.

Indian Oil Corporation said that it was compelled to increase the petrol price by Rs 6.28 a litre (excluding VAT/Sales Tax) effective midnight.

However, this increase excludes losses already suffered till date during the current financial year (2012-13), which would require an additional increase of around Rs 1.50 a litre for the rest of the year, the company said. The end retail price depends on the tax component of the States, which varies.

Last fiscal, petrol prices were revised five times — increased thrice and reduced twice. “The combined effect of changes in international petrol price and exchange rate has resulted in an increase in under-recovery since the last price change. However, due to declining international petrol prices during the current fiscal, under recovery has shown a downward trend from Rs 8.04 a litre in April second fortnight to Rs 7.17 a litre during May first fortnight, and further to Rs 6.28 a litre now,” Indian Oil said.

However, the company cautioned that international product prices and exchange rates are being monitored closely and impact of changes in these factors shall be considered in determining the selling price of petrol in future.

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