Petrol dearer by Rs 4 a litre, diesel by Rs 2

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Fuel prices to be rolled back if crude dips: DeoraNo oil price hike immediately, says Deora

Mumbai: The Centre raised the prices of petrol and diesel by Rs 4 and Rs 2, effective Wednesday midnight. The revised prices almost wipe off the effect of a reduction of Rs 5 and Rs 2 in petrol and diesel prices, made on January 28 this year. Business chambers, including Assocham and Ficci, have welcomed the increase in prices stating the decision will aid better management of government finances and improve the balance sheets of oil marketing firms.

Global crude prices which had tumbled to $30 a barrel early this year have risen 42% between April and June, the highest quarterly rise since 1990. But most economists said the rise will add less than half a percentage point to inflation.

The increase in fuel prices will bring in much relief to public sector oil marketing companies — IOC, BPCL & HPCL — and the upstream companies, mainly ONGC. The three public sector oil companies have lost well over Rs 103,300 crore in 2008-09 by selling fuel below the cost price. The government has issued oil bonds worth Rs 60,967 crore to the three companies so far. The oil marketing companies have also received discounts worth Rs 32,000 crore from upstream companies.

Sources at the petroleum ministry told FE, “With today’s decision to raise petrol price by Rs 4 per litre and diesel by Rs 2 per litre, it will have to be ascertained what will be the under-recoveries of OMCs and also the amount of subsidy discount to be given by upstream companies.”