Neutralising gains made from four reductions in petrol prices earlier this year, public sector oil companies have made the fuel dearer by Rs 1.86 at Rs 70.44 per litre. Interestingly, the gap between petrol and diesel prices, which narrowed in May-when the fuels cost Rs 63 per litre and Rs 50 per litre respectively-has now widened with petrol prices now at Rs 70.44 and diesel at Rs 50.84 per litre in New Delhi.
Industry observers expect petrol prices to go up
further due to rupee's volatility . "It is not because of global crude oil prices but due to forex and dollar-rupee exchange rate that oil prices are being affected here. We expect that rupee could further depreci-ate and if that happens, there is every possibility of petrol prices going up further," said Arvind Mahajan, partner-in-charge (energy), KPMG.
Mahajan added that though oil prices have
stabilised in the international market , the dollar-rupee exchange rate will reflect in future price changes. "But we expect petroleum prices to ease in next two years due to lower-ing demand."
This increase in petrol prices on Sunday was the fourth hike since June due to depreciation of the rupee. The rupee, which plays major role in petrol pricing, closed at 59.56/57 last week. The government deregulated petrol prices in June 2010. The June 1 increase in petrol prices was the first in three months. The previ-ous hike was on March 1, which was followed by prices being cut four times.
Diesel prices have been hiked five times since January, when the government authorised state-owned oil firms to increase prices by up to 50 paise per litre every month till the loss on the fuel are covered. Loss on diesel widened to Rs 6.31 a litre from Rs 4.87 at the beginning of this month. Besides, oil firms are also losing Rs 27.75 per litre on kerosene and Rs 335.14 on sale of every 14.2-kg domestic cooking gas cylinder.
Industry observers said that at current prices, Indian Oil would end the fiscal year with a total revenue loss of about Rs 60,000 crore while the industry (IOC plus other state-owned fuel marketing firms) would incur around Rs 112,500-crore loss.
Courtesy: Mail Today
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