After a one-day break on Sunday, fuel retailers hiked petrol price by 5 paise per litre and diesel by 13 paise on Monday, making the two costlier by 12.87%, and 16.05%, respectively in three weeks. Following the hike, petrol is now selling at Rs 80.43 per litre and diesel at record Rs 80.53 in Delhi.
Pump prices of auto fuel were raised on Monday even as international oil prices softened and benchmark Brent crude plunged by about 1.97% at $ 40.21 per barrel during the intraday trade. Brent had closed at $41.02 on the previous trading day on Friday.
So far, petrol prices have seen 21 revisions and diesel rates have been revised 22 times in the last 23 days. Before the start of daily price surge, petrol was sold at Rs 71.26 per litre in Delhi and diesel at Rs 69.39 a litre on June 6. Retail prices of auto fuels differ from city to city across the country due to variations in local levies.
Two people with direct knowledge of fuel pricing matters, requesting anonymity, said that the price rise in last three weeks also gave opportunity to state-run oil marketing companies to recover their past losses as they had frozen fuel rates to provide relief to the consumer who had been distressed by Covid-19 pandemic.
Fuel retailers had frozen petrol and diesel rates since March 16. However, retail prices were raised on May 5 because the Delhi government raised the value-added tax (VAT), the first person, who works for a state-run oil company, said.
Almost all states have raised VAT on petrol and diesel since mid-March to take advantage of low oil prices in the global markets.
The second person, who works in the petroleum ministry, said, “All past dues of oil marketing companies have already been recovered. Now, fuel price hikes are purely aligned with international prices of petrol and diesel. Diesel prices in Delhi have surpassed petrol because the state government raised VAT on diesel sharply. Even otherwise, internationally, diesel rates are higher than petrol.”
The official said the government has no role in the daily revision of petrol and diesel prices as they are deregulated products. The government had deregulated petrol pricing in 2010 and diesel in 2014.
The petroleum ministry did not respond to an email query. State-run fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – declined comments. The three public sector oil companies control over 90% of domestic fuel retail trade.
The oil company executive mentioned above said petrol and diesel rates are also high because of a significant jump in central levies that mop up the entire price benefits when international crude oil prices were low.
The Union government raised excise duties on petrol and diesel twice – first on March 14 by Rs 3 per litre each, and later on May 5 by Rs 10 a litre on petrol and Rs 13 on diesel. A Re 1 per litre hike in excise duty meant an additional Rs 14,500 crore revenue to the exchequer.
According to IOC website, total taxes on petrol and diesel are more than 60% of their retail rates. The basic rate of petrol in Delhi was Rs 22.11 a litre on June 16. Taxes on the fuel (both central excise and state levies) were Rs 50.69 a litre of which central taxes accounted for Rs 32.98. Similarly, the basic price of diesel was Rs 22.93 per litre, but total taxes levied on the fuel were Rs 49.43 per litre, with central taxes accounting for Rs 31.83.
The consumer could not reap the benefit of the recent oil price slump because both centre and states have cornered the entire benefits.
Brent crude was trading at $40.21 a barrel in the intraday trade on Monday (June 29), 108% higher than its low of $19.33 seen on April 21, 2020. India’s average crude oil import price in April was $19.90, $30.60 in May and about $40.5 a barrel in June (as on June 26), according to an official data.