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Forget international crude prices, this move by OMCs will hike your petrol and diesel prices

To pay for the enhanced rental demanded by DDA for giving out land for petrol pumps, state-run OMCs are contemplating a countrywide increase in petrol and diesel prices.

By: | Updated: September 16, 2016 11:27 AM
Petroleum ministry has approached the Ministry of Urban Development — under which the DDA falls — to resolve the license fee issue amicably. Petroleum ministry has approached the Ministry of Urban Development — under which the DDA falls — to resolve the license fee issue amicably.

To pay for the enhanced rental demanded by Delhi Development Authority (DDA) for giving out land for petrol pumps, state-run oil marketing companies (OMCs) are contemplating a countrywide increase in petrol and diesel prices. According to an Indian Express report, Petroleum ministry has approached the Ministry of Urban Development — under which the DDA falls — to resolve the license fee issue amicably. If that doesn’t happen, OMCs would have to pay the fees and the interest thereon, and recover it by raising fuel prices. As per the plan, instead of raising prices only in Delhi, the “burden of higher rental” be passed on countrywide with 75 per cent of the burden on all-India basis and balance 25 per cent on Delhi market. Quoting licence fee payments of Rs 634 crore, the OMCs have conveyed to the petroleum ministry that it would translate into a minuscule increase of 4 paise per litre across the country and a meagre rise of 50 paise per litre in Delhi.

However, sources told the Indian Express that the OMCs’ outstanding to DDA has ballooned to Rs 1,040.69 crore including interest and delayed payment charges. Moreover, DDA last July levied an extra Rs 546.69 crore for additional nozzles installed at the pumps over and above the permitted one petrol and one diesel filling points. “The total of Rs 1587.38 crore would translate into a price jump of Rs 1.25 per litre in both fuels in Delhi and 10 paise per litre across the country,” they said. OMC officials declined to comment on the possible revision in prices. Effective 2007-08, DDA hiked license fees for petrol pumps using rates arrived at through auction of its land for commercial use. Subsequently, it argued that since retail pricing of motor fuels had been deregulated, it was fair for DDA to charge a higher price, still lower than market price.

The OMCs approached the Delhi High Court contesting the steep rise in license fees. They said that 141 out of the 193 outlets operating on DDA land would become unviable if the enhanced fee was charged.

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