Petrol and diesel prices may soon rise at the end of the ongoing Assembly elections with oil companies looking to …
Petrol and diesel prices may soon rise at the end of the ongoing Assembly elections with oil companies seeking to raise the retail price of the two auto fuels between Rs 2 and Rs 3 a liter per phase and make up for the losses they have caused by keeping prices at artificially low levels in the run-up to the local elections. Government sources said oil companies were making losses to the tune of Rs 3 and Rs 2 per liter in the sale of petrol and diesel, respectively, due to rising global crude prices which also affected international product prices. Petrol and diesel prices have not been raised since February 27, but car fuel prices have actually fallen four times in March and April, bringing petrol prices down 77 paisa per liter and diesel by 74 paisa per liter in the national capital. The fall has come though the average price of Indian basket crude was around $ 61.22 in February, at a below-average price of $ 64.73 in March and on average close to $ 66 a barrel in April to date this.
Although the retail price of petrol and diesel is set on the basis of a rolling 15-day average of the price of a product globally, a downward review of retail prices has resulted in OMCs’ losses in selling both products and would no longer wait after the elections to review the pump prices up. However, there is a caveat. The review would depend on signs coming from the government. A source at a public sector oil company said a stronger rupee would make crude cheaper for companies and so the actual adjustment in the retail prices of petrol and diesel may not be heavier. But it would all depend on how rupee settles against the dollar in April. “Oil PSUs have avoided hiking oil prices alongside global crude rates for more than a month now and the pattern may well continue until the end of the month, when state elections are over. Therefore, it would not be surprising if domestic oil prices witness a sharp spike after the election season ends, unless the Center announces a new advisory to surprise the required hike to stem public anger in the midst of a raging pandemic, “said the energy sector expert of a global audit and consulting firm, which did not want to be named.
The OMCs have been soft on increasing petrol and diesel prices since early March 2021 when the provincial election dates were announced. In fact, they went in for a price cut for the first time this year on two consecutive days – March 24 and 25 – after keeping oil prices steady for the past 24 days. The price dropped again on March 30. After that, fuel prices have remained unchanged for the last 15 days before falling again on April 15. Faster, petrol and diesel prices increased 26 times in 2021 with both car fuels increasing by Rs 7.46 and Rs 7.60 per liter, respectively, so far this year. This would need to be offset by a gradual rise in retail prices of petrol and diesel over a few days before fuel was matched to global market rates. Assembly elections have been held in Tamil Nadu, Kerala, Assam and Puducherry, while the final phase of voting in West Bengal will be held on April 29. All results will be announced on May 2.