Retail prices of petrol and diesel were hiked by the oil marketing public sector units after more than two weeks. The price of petrol shot up by 17 paise per litre, while diesel was costlier by 21 paise per litre, according to the rates in New Delhi.
With the hike, petrol at Rs 74.80 per litre is now at 56-month high while diesel at Rs 66.14 is an all-time high.
On paper, prices of petrol and diesel have been deregulated, but fuel prices have such a political connotation that commercial decisions don’t always take precedence for oil marketing public sector units such as Indian Oil, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
Since mid-June last year, the likes of Indian Oil, BPCL and HPCL had been revising the retail selling price of petrol and diesel on a daily basis. However, in the lead up the Karnataka elections, even as Brent crude prices rose from $75 per barrel to $77 per barrel, the retail selling price of petrol and diesel remained static. They were already at historic highs, and sources in the oil marketing PSUs say they had been told ‘unofficially’ to wait before increasing the prices.
“The halt on increasing the petrol and diesel prices has cost us (the three oil marketing PSUs) anywhere between Rs 400-500 crore,” a company official said on condition of anonymity.
Crude oil prices don’t always mirror the retail price of petrol and diesel. According to officials, the retail price of petrol and diesel is based on the landed price of their imports. But even here, the numbers indicate that the likes of Indian Oil, BPCL, and HPCL absorbed the hike. Data from the Petroleum Planning and Analysis Cell shows that the landed price of petrol imports increased to $82.98 per barrel as on May 14 from $78.84 per barrel on April 24, when the price of petrol was last revised. Similarly, the landed price of diesel imports increased to $88.63 per barrel on May 14 from $84.68 per barrel on April 24.
Before the Karnataka elections, a 31 cent per barrel increase in the landed price of diesel imports led to an 18 paise per litre increase in its retail price on April 24. Similarly, 19 cent per barrel increase in the landed price of petrol imports led to a 13 paise per litre increase in retail prices of petrol on April 24.
The government has denied interfering in the daily price revisions of the oil marketing public sector units. Minister of Petroleum & Natural Gas and Skill Development & Entrepreneurship, Dharmendra Pradhan, had publicly denied issuing any directive to the oil marketing public sector units to hold back daily price revisions. Indian Oil’s Chairman Sanjiv Singh had also denied the existence of any such directive.