Petrol, diesel price hiked by 60 paisa per litre after 83-day hiatus

Petrol and diesel price was on Sunday hiked by 60 paisa per litre, as the state-owned oil firms restarted daily price revisions after a 82-day hiatus.

Petrol price in Delhi was hiked to Rs 71.86 per litre from Rs 71.26 a litre till Saturday, while diesel rates were increased to Rs 69.99 per litre from Rs 69.39, according to a price notification of state oil marketing companies.

Daily price revision has restarted, an oil company official said.

While oil PSUs have regularly revised ATF and LPG prices, they had since March 16 kept petrol and diesel prices on hold, ostensibly on account of extreme volatility in the international oil markets.

Auto fuel prices were frozen soon after the government raised excise duty on petrol and diesel by Rs 3 per litre each to mop up gains arising from falling international rates.

The government on May 6 again raised excise duties by Rs 10 per litre on petrol and Rs 13 per litre on diesel.

Oil companies, instead of passing on the excise hike to consumers, decided to adjust them against the reduction required because of the drop in international oil prices. They used the same tool and did not pass on the Re 1 per litre hike required for switching over to ultra-clean BS-VI grade fuel from April 1.

Petrol price in Mumbai and Kolkatta was hiked by 59 paisa each to Rs 78.91 and Rs 73.89 per litre, respectively. In Chennai, the hike was 53 paisa to Rs 76.07, according to the price notification.

For diesel, price was hiked by 58 paisa in Mumbai to Rs 68.79 and in Kolkata by 55 paisa to Rs 66.17. In Chennai, the price was hiked from Rs 68.22 to Rs 68.74.

While petrol and diesel prices had been kept on hold for nearly three months, they are regularly revised for ATF and LPG despite the fact that the same volatility was witnessed in their prices as well.

More importantly, no airline operated between mid-March to May 25 in view of the restrictions placed to check the spread of coronavirus, yet oil companies have continued to revise downward jet fuel prices.

In fact, oil companies used to revise ATF prices on the 1st of every month, but adopted fortnightly revisions on March 21 to pass on the benefit of falling international oil prices to airlines.

Though the government has deregulated petrol and diesel prices, rate changes have been in the past put on hold by public sector oil companies -- Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) -- for reasons that appear to be non-commercial.

There was a 19-day price freeze on petrol and diesel ahead of Karnataka polls in May 2018, despite international fuel prices going up by nearly USD 5 per barrel. However, no sooner were the elections over, they rapidly passed on to customers the desired increase -- over 16-straight days post-May 14, 2018, petrol price climbed by Rs 3.8 per litre and diesel by Rs 3.38 per litre.

Similarly, they had stopped revising fuel prices for almost 14 days ahead of the assembly elections in Gujarat in December 2017.

These companies had also imposed a freeze on petrol and diesel prices between January 16, 2017 and April 1, 2017, when assembly elections in five states -- Punjab, Goa, Uttarakhand, Uttar Pradesh and Manipur -- were held.

During the 2019 general elections, they moderated the revision by not passing on all of the desired increase in rates to consumers, industry sources said.

The rates began to rise a day after the final phase of polling for the Lok Sabha elections ended.