New Delhi, Nov 3: State-owned oil companies today effected yet another steep hike in petrol price, by Rs 1.80 per litre with effect from midnight tonight, the 5th increase this year, coming on top of falling rupee and rising cost of imported crude.
Petrol price in Delhi will cost Rs 68.64 per litre, up from Rs 66.64 a litre. The retail selling price in different cities will vary according to the local sales tax.
“Crude oil has been more or less steady but rupee depreciation is a cause of concern. We have been forced to increase prices because of rupee depreciation,” BPCL Chairman and Managing Director R K Singh told PTI. The base price has been increased by Rs 1.50 per litre.
“Rupee has depreciated from Rs 46.25 a dollar to Rs 49.40, increasing our cost of imports,” IOC Director (Finance) P K Goyal said.
Sources said Oil Minister Jaipal Reddy consulted Finance Minister Pranab Mukherjee before oil companies were given a green signal to raise prices.
The heads of three oil companies ---IOC, BPCL and HPCL— met here this evening to decide on the price hike after they got a firm green signal from the oil ministry, they added.
This is the second hike in petrol prices in less than two months and it came on a day when the food inflation rose “dangerously” to 12.21 per cent for the week ended October 22.
Oil marketing companies had earlier hiked petrol prices by Rs 3.14 a litre on September 16 when the rupee was ruling at about 48 to a US dollar.
The government had in June last year deregulated or freed petrol from all price controls but the retail rates have not moved in line with cost as high inflation rate forced the oil companies to seek ‘advice' from parent oil ministry before revising rates.
This is the sixth price increase since petrol price was deregulated, after excluding minor changes resulting from duty changes and increase in dealers commission.
Yesterday Reddy had met Mukherjee to appraise him of the precarious financial health of oil companies.
Earlier in the day today, the oil ministry sent a detailed note to the Cabinet Secretariat seeking urgent action on deteriorating financial health of oil PSUs.
The Oil Ministry in its note pointed that Indian Oil, Bharat Petroleum and Hindustan Petroleum together will lose about Rs 1,30,000 crore in revenue this fiscal on selling diesel, domestic LPG and kerosene at government-controlled rates.
Sources said the three companies are losing Rs 333 crore per day on selling fuel below cost.
State-owned oil firms are currently losing Rs 9.27 per litre on diesel, Rs 26.94 per litre on kerosene sold through the public distribution system (PDS) and Rs 260.50 per 14.2-kg LPG cylinder supplied to households for cooking purposes.
While the loss on these three products are compensated through a combination of government cash subsidy and upstream oil firm doleouts, no such mechanism exists for making good the losses on petrol as the product is deregulated.
The three firms are virtually living on borrowed money as they had to raise funds to meet even working capital requirement in the absence of fuel selling price not meeting even operating expenses.
The oil ministry had also requested for an early meeting of the high-powered ministerial panel to decide on ways to deal with the crisis.
The Empowered Group of Ministers (EGoM) meeting is being sought before the winter session of Parliament that begins on November 22.
The ministerial panel is essentially a consensus building body of the Congress-led UPA government and comprises of key allies like DMK, TMC and NC. The allies had in September scuttled plans to limit supply of subsidised LPG cylinders to 4-6 per household a year with a view to reduce subsidies.
