Oil firms are planning to hike petrol prices by 1.83/per litre

The government owned oil companies are planning to hike the petrol prices for 13th time since June 2010, due to depreciation in rupee which increased the cost of imports of crude oil.

On September 2011, Indian Oil, Hindustan Petroleum and Bharat Petroleum had increased petrol prices by Rs 3.14 per litre, at that point of time, the Rupee was ruling at around Rs 48 against $1. The rupee has depreciated because of the slowdown in United States and European economies. Presently rupee is trading at over Rs 49 against American currency.

As per HPCL senior official, oil companies are making losses on petrol and may increase prices to cover these losses. The international market price of crude oil are hovering around $108 per barrel, at present exchange rate, petrol price of Rs 66.84 per litre in Delhi corresponds to about $102 per barrel equivalent of crude oil price.

In June 2010, the government had deregulated petrol prices, however the retail rates have not moved in line with the cost as high inflation rate forced the oil companies to seek advice from parent oil ministry before revising rates.

However, it is not clear that when petrol prices would be increased. Without any elaboration, the official said, 'We are in consultations.'

Currently oil companies are losing around Rs 1.50 per litre on the sale of petrol after including local taxes and are looking to hike petrol prices by Rs 1.83 per litre. Along with petrol, the oil marketing companies are also losing around Rs 333 crore a day on selling diesel, domestic cooking gas and kerosene below market price.

Oil firms lose around Rs 9.27 and Rs 26.94 on every litre of diesel and kerosene, and around Rs 260.5 on every 14.2 kg LPG cylinder.  At this pace, in the current financial year the firms are expected to lose around Rs 1,21,459 crore in revenue on the sale of diesel, domestic LPG and kerosene.

The said revenue loss on these three petroleum products is compensated via a combination of government cash subsidy and upstream oil firm dole outs. But, there is no such mechanism to compensate for the revenue loss made on the sale of petrol as the price has been decontrolled.

However, government has failed to give the committed cash subsidy to oil firms of around Rs 15,000 crore announced for the April-June 2011 quarter, worsening the financial health. During the said quarter, oil companies made revenue loss of more than Rs 9,000 crore.