Petrol crosses Rs 110 per litre in Delhi, LPG turning costlier too

By: |
November 03, 2021 2:15 AM

The surge in prices are likely to continue till the end of the year with the OPEC+ countries showing no signs of increasing production over the pre-determined levels till December, even as global crude demand is on the rise.

Thanks to rising petrol prices, VAT earned by Delhi has increased to the current level from Rs 23.4/litre in mid-September, when final petrol price was Rs 101.19/litre.Thanks to rising petrol prices, VAT earned by Delhi has increased to the current level from Rs 23.4/litre in mid-September, when final petrol price was Rs 101.19/litre.(Image: REUTERS)

Retail price of petrol in Delhi crossed the Rs 110-mark for the first time on Tuesday, as state-run oil marketing companies (OMCs) gradually increased the base-price of the product amid rising international crude rates.

The surge in prices are likely to continue till the end of the year with the OPEC+ countries showing no signs of increasing production over the pre-determined levels till December, even as global crude demand is on the rise.

Pump price of petrol in Delhi was Rs 110.04 per litre on Tuesday and diesel was sold at Rs 98.42/litre. At present, the prices charged to dealers by Indian Oil Corporation Ltd (IOCL) are Rs 47.6/litre for petrol and Rs 49.6/litre for diesel. The Centre’s tax (basic excise, surcharge, agri-infra cess and road/infra cess) is currently Rs 32.9/litre for petrol and Rs 31.8/litre for diesel, while Delhi state VAT is Rs 25.3/litre on petrol and Rs 14.4/litre on diesel. The Central government taxes on auto fuels are constant while the state VAT changes with rise and fall in prices charged by OMCs. Thanks to rising petrol prices, VAT earned by Delhi has increased to the current level from Rs 23.4/litre in mid-September, when final petrol price was Rs 101.19/litre.

High crude oil prices have also impacted the prices of liquefied petroleum gas (LPG) and OMCs have increased the prices of the standard 14.2-kg cylinder four times since April, to the current rate of Rs 899.5 in Delhi. India imports more than 55% of its LPG requirement. The government is not paying any subsidy on LPG since May 2020, contributing to higher impact on consumers. A recent study by the by the Council on Energy, Environment and Water (CEEW) pointed out that rural households are spending nearly 10% of their monthly expenditure on the cooking fuel.

State-run OMCs raising final product prices tandem with global crude rates has helped them to improve their auto-fuel marketing margins. According to analysts at Motilal Oswal Financial Services, marketing margin of IOCL recorded an 18% year-on-year growth in Q2FY22 to Rs 7/litre. Marketing margins improved as retail petrol prices were kept unchanged (at Rs 101.84/litre in Delhi) between July 17 and August 21, while global crude corrected from around $73/barrel to about $65/barrel in the same period. Apparently, the OMCs had been deferring cuts in fuel prices to make up for the losses suffered between late February and May, when they could not hike the rates in conformity with the crude movements, due to Assembly elections in four states and the UT of Puducherry.

With the hope of bringing down global crude prices, India has been repeatedly requesting oil producing countries to increase their output. Crude oil import by India in April-September was 100.7 million tonnes, recording an annual rise of 12.9%. Due to the rise in global crude oil rates, the value of the import was $51 billion, 127.7% higher than the same period in 2020. As much as 85% of the country’s crude oil requirements are met through imports.

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