Oil companies may hike retail petrol price marginally
New Delhi   10-Aug-2010

CAR owners and motorcyclists may have to brace up for another hike in retail petrol price. Government-owned oil marketing companies (OMCs) are contemplating with Rs 1.00 ­ 1.50 per litre hike in petrol prices following a surge in international crude prices beyond $ 80 per barrel this month.

On Nymex, crude touched $ 82.55 on August 3. It was hovering around $ 81.56 per barrel on Monday.

"If international prices of crude continue to stay above $80 per barrel, it calls for a revision (of petrol price). We are reviewing it and all three OMCs will take a decision together," IOC chairman, Brij Mohan Bansal, told Financial Chronicle on Monday.

Bansal didn't divulge the exact quantum and time when petrol price may be increased.

Petrol became expensive by Rs 3.50 per litre on June 25 after government decontrolled its prices. International crude price was in the range of $74.34 per barrel at that time. Now, the OMCs are free to set market-determined petrol prices. Every dollar fluctuation in international crude oil price would impact petrol retail price by nearly 35-38 paise per litre.

"We are reviewing the situation. It's like any other free product now. Prices can go up or come down any time," B Mukherjee, director (finance) of HPCL told Financial Chronicle.

"Prices will go up by at least Rs 1 -1.50 per litre. The decision is likely to be taken after monsoon session of Parliament," said an industry official privy to the development. Last week, both houses of Parliament witnessed pandemonium with opposition parties rejecting government move to decontrol petrol price in retail markets.

"Crude prices should remain range bound at $ 78 $ 84 per barrel in this month or at least for onetwo months," said Kuljeet Kataria, head of commodities at Motilal Oswal Financial Services. "US debt data is still showing some weakness," he added.

Post-deregulation of petrol prices, the OMCs decided to review petrol prices once a month. Petroleum minister Murli Deora is on record saying that government will intervene if prices shoot up too much. But, he did not set any parameter for government exercising its control.