Petrol, diesel prices hiked again; record 10 pc rise in 16 days

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Petrol and diesel prices on Wednesday were hiked again by 80 paise a litre each, taking the total increase in rates in the last 16 days to Rs 10 per litre or over 10 per cent.

Petrol in Delhi will now cost Rs 105.41 per litre, as against Rs 104.61 previously, while diesel rates have gone up from Rs 95.87 per litre to 96.67, according to a price notification of state-run fuel retailers.

Rates have been increased across the country and vary from state to state depending upon the incidence of local taxation.

This is the 14th increase in prices since the ending of a four-and-half-month long hiatus in rate revision on March 22.

In all, petrol and diesel prices have gone up by Rs 10 per litre each or 10.5 per cent.

Petrol in Delhi was priced at Rs 95.41 a litre prior to the start of the revision cycle on March 22. The increase in diesel rate is 11.5 per cent over the Rs 86.67 a litre rate prevalent prior to the 14 hikes.

International oil prices, which neared USD 140 a barrel following Russia’s invasion of Ukraine, have tempered to around USD 107 per barrel, but fuel prices continue to be on the rise in India as state-owned fuel retailers cover for the holding rates for a record 137 days during elections in states like Uttar Pradesh and Punjab.

Petrol and diesel prices have been hiked by 80 paise a litre each for five straight days, totalling Rs 4 per litre – a record increase for any five days since the start of daily price revision in June 2017.

The Rs 10 a litre increase in rates in just over a fortnight too is the highest ever any equivalent period in two decades, according to price information available from state-owned fuel retailers.

Petrol prices have surged past Rs 100 a litre mark in all major cities across the country while diesel is above that level in several places in Maharashtra, Andhra Pradesh, Odisha, Chattisgarh, Telangana, Madhya Pradesh, Bihar, Jharkhand, Tamil Nadu and Kerala.

Parbhani in Maharashtra has the costliest petrol in the country at Rs 123.46 a litre, while diesel is costliest at Chittoor in Andhra Pradesh (Rs 107.61 a litre).

Rates depend on local taxes as well as freight for transporting the fuel.

Previously, the border town of Sri Ganganagar in Rajasthan had the costliest fuel. But the Rajasthan government cut VAT, alongside several other states, following the November 4, 2021 decision of the Union government to reduce excise duty on petrol by Rs 5 a litre and by Rs 10 per litre on diesel.

Maharashtra and Andhra Pradesh were among over half a dozen states that did not join the bandwagon to reduce local sales tax (VAT).

On Wednesday, diesel crossed the Rs 100 mark in Chennai as well.

Prices had been on a freeze since November 4, ahead of the assembly elections in states like Uttar Pradesh and Punjab — a period during which the cost of raw material (crude oil) soared by about USD 30 per barrel.

The rate revision was expected soon after the counting of votes on March 10, but it was put off by a couple of weeks.

The increase in retail price warranted by crude oil prices rising during the 137-day hiatus is huge, but state-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are passing on the required increase in stages.

Moody’s Investors Services last month stated that state retailers together lost around USD 2.25 billion (Rs 19,000 crore) in revenue for keeping petrol and diesel prices on hold during the election period.

Oil companies “will need to raise diesel prices by Rs 13.1-24.9 per litre and Rs 10.6-22.3 a litre on gasoline (petrol) at an underlying crude price of USD 100-120 per barrel,” according to Kotak Institutional Equities.

Crisil Research said a Rs 9-12 per litre increase in retail price will be required for a full pass-through of an average USD 100 per barrel crude oil and Rs 15-20 a litre hike if the average crude oil price rises to USD 110-120.

India is 85 per cent dependent on imports for meeting its oil needs and so retail rates adjust accordingly to the global movement.