As expected, the price of petrol has been hiked by Rs. 5 with effect from Sunday (15th May 2011) and a hike in diesel prices will soon follow. This is the highest price hike announcement since May 2008.
Petrol prices by city
- Rs. 63.37 per litre in Delhi
- Rs. 67.71 per litre in Kolkata
- Rs. 68.33 per litre in Mumbai
- Rs. 67.22 per litre in Chennai
The current petrol price per litre is Rs. 11.94 higher (Rs. 63.37, Delhi) than it was in June 2010 (Rs. 51.43, Delhi).
It has to be noted that the Indian Government had deregulated petrol prices from June 2010 and the price of petrol has been hiked seven times in the June 2010 -January 2011 period.
Diesel price to go up by Rs. 4
According to the PTI, Finance Minister, Pranab Mukherjee has hinted that the prices of diesel, kerosene and LPG may also go up in the near future.
There are speculations that the price of diesel will go up by Rs. 4 per litre and that of LPG (cooking gas) by Rs. 20 – 25 per cylinder later this month. The government is subsidizing diesel because public transport and farm equipments run on it. Any increase in the price of diesel will increase transportation costs which will then reflect in the cost of essential commodities transported on a daily basis across the country.
The minister mentioned that the empowered group of ministers (EGOM) headed by him, will decide on the prices in a meeting next week. Talking about the petrol price hike, the finance minister stated that petrol prices were last increased when the international price was Rs. 68$ per barrel, but currently, the price has gone up to 110$ per barrel.
Another petrol price hike possible
Oil companies in India incur a loss of Rs. 10.50 per litre of petrol when compared with international petrol price. Oil companies, will soon push for another price hike in order to bring domestic petrol prices at par with international prices.
The government had been postponing a hike in fuel prices due to various reasons, chief among them being the then imminent assembly elections in Tamil Nadu, Kerala, Assam, West Bengal and Puducherry which ended on May 10th.
A hike in fuel prices before elections would upset voters and hence, the price hike was announced immediately after the 2011 state elections. Also read: Fuel prices to shoot up soon
Assuming the price of crude oil is internationally at $110 per barrel, oil companies have projected a loss of Rs. 1, 80,000 crore this fiscal (2011-2012).
The present price hike will reduce the projected loss to some extent but will still be far from providing marginal relief to Oil companies. In 2008-2009 fiscal, oil companies reported a revenue loss of Rs. 1, 03,292 crore and in the last fiscal (2010-2011), oil companies have suffered a loss of Rs. 78,000 crore.
It has to be noted that India imports three-quarters of its oil for its domestic usage from overseas market. Fuel price hikes accelerate the already fast growing inflation rates of the country. India’s inflation is the second highest among the BRIC (Brazil, Russia, India & China) nations.