New Delhi, Jan 2: Petrol prices will not be raised this fortnight as state-owned oil firms apparently could not get political clearance for the over Rs 2 per litre hike in rates needed to achieve parity with the imported cost on account of the weakening rupee.
Indian Oil (IOC) and other state-run firms, which had last month refrained from hiking petrol prices as the government was wary of protests while Parliament was in session, are not raising the rates even this fortnight, a source privy to the development said.
Given the drubbing the Lokpal Bill got in the Rajya Sabha, the government does not want to alienate the Trinamool Congress, the most vocal opponent of fuel price increases within the ruling UPA.
Furthermore, Assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced and a hike in petrol prices would have created a “negative image”, the source said.
Oil firms, as per the usual practice, revise the rates for petrol on the 1st and 16th of every month based on the average imported price of oil and exchange rates during the previous fortnight.
However, they postponed a decision on the hike on December 31 as it was New Year's eve.
Today, the oil firms could not get the “informal political approval” they used to seek from their majority shareholder, the source said.
A hike of over Rs 2 per litre was necessitated because the rupee depreciated to Rs 53.07 per US dollar in the second fortnight of December, based on which the rates on January 1 were to be decided.
The average exchange rate stood at Rs 51.98 per US dollar in the first fortnight of December.
International prices of gasoline, against which domestic petrol rates are benchmarked, averaged USD 111.71 per barrel in the second half of December, almost the same as in the previous fortnight.
Petrol at IOC and Bharat Petroleum Corp (BPCL) pumps in Delhi is now priced at Rs 65.64 per litre, while it costs Rs 65.65 a litre at retail outlets of Hindustan Petroleum Corp.
The trio had cut petrol prices twice in November in the wake of a drop in international oil rates.
They reduced petrol prices by Rs 2.22 per litre, or 3.2 per cent, from November 16, followed by a Rs 0.78 per litre cut from December 1.
The domestic rates, which were last revised on November 30, are pegged at a Rs 51.50 per US dollar exchange rate.
State-owned oil companies use the fortnightly average of benchmark oil prices and exchange rates to revise retail rates on the 1st and 16th of every month.
Petrol prices were freed from government control in June last year, but public sector companies continue to informally consult their parent Oil Ministry before taking any decision.
The government continues to control rates of diesel, domestic LPG and kerosene, which are sold way below cost to keep inflation in check.
The oil firms lose Rs 12.71 per litre of diesel, Rs 29.93 per litre of kerosene and Rs 326 per 14.2-kg LPG cylinder.
