Govt. likely to hike petrol price by Rs 2 a liter; diesel by Re 1

Government is likely to hike petrol prices by Rs 2 a liter and diesel by Re one a liter unless excise duty on the two fuels are cut to neutralize the impact of firming international oil rates.

State fuel retailers Indian Oil (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) currently lose Rs 1.35 billion a day on sale of petrol, diesel, LPG and kerosene and their annual revenue loss for current fiscal is estimated to be at Rs 387 billion.

The basket of crude oil India imports has averaged USD 70.49 per barrel in the second fortnight of June against the May average of USD 58, sending alarm bells ringing, a Petroleum Ministry official said.

``We have to act to save our PSU``, he said. ``The burden of rising global oil prices has to be shared equally between the companies, the government and consumers``.

PSUs lose Rs 2.96 a liter on diesel and Rs 6.08 per liter on petrol. ``One-third of this or Rs 2 a liter on petrol and Re 1 on diesel can be passed on to consumers`` he said.

The rest of the losses would be covered by issue of government bonds to the retailers and subsidy sharing by upstream firms like ONGC.

``If the Finance Minister Pranab Mukherjee cuts excise duty on the two fuels, consumers can be spared from price hike``, he said.

Petrol attracts an excise duty of Rs 11.35 a liter and diesel Rs 1.60 a liter. Besides Rs 2 a liter road cess is levied on the two fuels.

The official said the proposal to hike petrol and diesel rates would have to go to the Cabinet for approval.

Petroleum Minister Murli Deora refused to answer questions on price hike, but the issue of deregulation of petrol and diesel prices was still under consideration of the government.

The government has been mulling decontrolling petrol and diesel prices for couple of months now but may be fast losing the window as the move would now result in steep rise in fuel prices.
* Q - Quote , N - News , C - Chart , F - Financials

Courtesy/Source: myiris.com