Faced with rising under-recoveries and continuing upward trend in the international crude oil prices, the oil marketing companies announced an increase of Rs. 3.14 petrol prices on Thursday. The cost of petrol will be Rs. 66.84 a litre in Delhi. The increase will be effective from midnight Thursday.
The companies attributed the hike to the rising crude oil prices and a depreciating rupee that has increased the cost of crude imports. The petrol price in Delhi will be increased by Rs. 3.14 a litre to Rs.66.84. This is the second increase in the past four months. Petrol prices vary from city to city, depending on VAT and other levies. Petrol will now cost Rs. 71.28 a litre in Kolkata, Rs. 71.92 in Mumbai and Rs. 70.82 in Chennai.
Consumers could be in for another jolt on Friday, when the Empowered Group of Ministers (EGoM) on fuel will meet to decide on curtailing the number of LPG cylinders to households that pay income tax to 4 to 6 a year.
The Centre for Science and Environment (CSE) slammed the increase in petrol prices, arguing that it should not be done without narrowing the price gap with diesel. Terming the hike “mindless,” the CSE said such decisions would only lead to gross misuse of the poor persons' fuel by rich car owners, a massive revenue loss to the government and a serious damage to public health. It demanded that the government ban the use of diesel in cars and increase the price of diesel and tax on diesel cars.
The current petrol price of Rs. 63.70 a litre corresponds to the crude oil price of $103 a barrel. But the Indian crude oil basket today stands at $110-$111. This difference, coupled with the rupee declining to the two-year low of Rs. 48 against the dollar, necessitated an increase in the retail price.
In December 2010, the oil marketing companies hiked petrol prices by Rs. 2.94 a litre. On January 15 this year, the government hiked the prices by Rs. 2.50. Again on May 15, the oil companies increased the price by Rs. 5. On June 25 this year, the government hiked the diesel prices by Rs. 3 a litre, the domestic LPG by Rs. 50 a cylinder and kerosene by Rs. 2 a litre.
Indian Oil Corporation chairman R.S. Butola said the companies were forced to increase the prices as the rupee had depreciated and under-recoveries were increasing at an alarming rate.