Post - poll increase in petrol price on agenda
Kolkota   28-Feb-2012

Oil firms are likely to raise petrol prices after the Assembly polls on the back of a spike in global crude oil prices. The government is also expected to soon take a call on increasing diesel and domestic LPG prices.

“The government will not intervene in fixing petrol prices which is a deregulated product. However, a decision on diesel and LPG price hikes would be taken by the government as several options are on the cards,” oil ministry sources said.

Global gasoline prices in the spot market have spiked $22 to $131 per barrel since state-owned oil firms last revised petrol prices two months back.

The three oil marketing companies — IndianOil, BPCL and HPCL — are losing about Rs 4 per litre of petrol. However, they had not revised prices after receiving an informal government directive to freeze hikes before the assembly elections.

“I am not linking the price increase with any event. It could be any time. If the prices remain high, we will have no recourse but to increase it. The company cannot sustain for long. We will be forced to raise petrol prices if (international) prices prevail at this level,” R.S. Butola, chairman of IndianOil, said.

“Since we are unable to pass on the required increase in petrol prices, we have asked the government that losses be made good by way of cash subsidy,” he said.

The oil companies revised the price of petrol several times since deregulation in June 2010 based on the fortnightly average of international gasoline prices. They had earlier put on hold the revision in prices before the elections in Bengal last year.

While revising the prices, oil firms take into consideration the international price of the product and currency fluctuation. Petrol price data from Singapore and Arab-Gulf product spot markets serve as markers for Indian.

Diesel rates

Officials said the government was working on a multi-pronged strategy to deal with the price issue in diesel and LPG cylinders, but the final decision would be taken at a political level. With fiscal deficit likely to be a percentage more than the budgeted 4.6 per cent of GDP (gross domestic product), there is a move to roll back the duties on diesel and also increase the product prices.

The government is also planning to impose an additional tax on diesel cars to discourage the increasing preference for these among buyers because of the huge price difference between the two fuel variants.