In a sixth hike in three months, petrol prices on Saturday went up by Rs 2.35 per litre mainly owing to a steep spurt in international crude prices, depreciating rupee and the political situation panning out in the Middle East. In a related move, diesel prices too went up by 50 paise per litre amid the Petroleum Ministry having expressed concern over the burgeoning under-recovery burden on oil marketing companies (OMCs) with the Prime Minister Manmohan Singh and the Finance Minister P Chidambaram.
With the petrol price hike effective from midnight, it will now cost Rs 74.10 per litre in the national capital including (value added tax) VAT. Diesel price hike will also be effective from midnight and it will cost Rs 51.97 per litre in Delhi.
The hikes were announced by Indian Oil Corporation (IOC, the largest retailer) through a statement. This is the sixth increase in petrol prices since June and in all petrol prices have gone up by a massive Rs 9.17 per litre, excluding VAT. Price of petrol in Delhi has gone up by over Rs 11 per litre after including state tax since June 1.
Diesel prices are being hiked by 50 paise per litre by OMCs after the Government allowed them to do so in January this year, mainly to cut down subsidy burden. The latest increase in the ‘aam admi’s’ fuel is the eighth one since January 17 and had rupee not depreciated, all the losses on diesel sales would have been wiped out by now. With the rupee having fallen by around 25 per cent since April, the situation has worsened and the OMCs are losing Rs 12.12 per litre.
IOC said since the last revision in rates effective August 1, the rupee-US dollar exchange rate has deteriorated sharply, from Rs 59.49 to a dollar to Rs 63.88, necessitating this price increase.
“Currently, the rupee-dollar exchange rate continues to be extremely volatile. Also, geopolitical situation in the Middle-East is leading to pressure on international oil prices as well,” the IOC statement said.