Petrol, diesel price increase on wait-and-watch mode; CNG rates hiked

Petrol, diesel price increase on wait-and-watch mode; CNG rates hiked

CNG price in the national capital and adjoining cities on Tuesday was hiked by ₹0.50 per kg, while an imminent increase in petrol and diesel price has been put on wait-and-watch mode for more clarity on global oil prices.

CNG price in NCT of Delhi has been increased to ₹57.51 per kg from ₹56.51, according to the information posted on the website of Indraprastha Gas Ltd—the firm which retails CNG and piped cooking gas in the national capital.

Following the firming up of international gas rates, IGL has been raising CNG rates by up to 50 paise (₹0.50) per kg periodically. Prices have gone up by about ₹4 per kg this year alone.

Apart from Delhi, CNG will be ₹1 per kg more expensive in Noida, Greater Noida, and Ghaziabad. From Tuesday, it will cost ₹59.58 per kg.

Rates differ from state to state depending on the incidence of local taxes.

There is no rate change in Mumbai, where CNG costs ₹66 per kg.

IGL has not changed the price of piped cooking gas supplied to household kitchens.

However, an increase in petrol and diesel prices, which was expected after the ending of the multi-phase polling in Uttar Pradesh, was not affected on Tuesday.

Petrol costs ₹95.41 a litre in Delhi and Rs 109.98 in Mumbai. Diesel is priced at ₹86.67 a litre in Delhi and ₹94.14 in Mumbai.

PSU fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will watch the evolving situation internationally for a couple of more days before revising rates, three officials said.

This decision follows marathon meetings company executives had with oil ministry officials late into Monday night.

“We are watching the situation closely. We need to see if the current spike in international oil prices is a temporary phenomenon or is it here to stay,” a senior executive with one of the three retailers said.

Fuel prices have been on a freeze for the past four months as five States including politically significant Uttar Pradesh went to the polls. This despite, rates swinging from $81.5 per barrel in early November to near $140 per barrel on Monday.

International benchmark Brent was trading at around $127 per barrel on Tuesday.

Officials said the government is worried about the impact of a price increase—both in terms of general price rise as well as its political fallout.

“On paper, we have the freedom to decide the retail selling price of petrol and diesel. But it is also a fact that we have been incurring huge losses,” another official said.

An industry source said the freeze on rate revision was ordered so that daily increases did not affect the electoral prospects of the ruling dispensation.

Since June 2017, fuel prices are to be adjusted daily in line with the benchmark international rate in the preceding 15 days. But rates have been on the freeze since November 4, 2021.

The freeze came just as the Modi government cut excise duty on petrol by ₹5 per litre and that on diesel by ₹10 a litre, to bring down rates from record-high levels. Most State governments too lowered local sales tax or VAT.

Before these tax reductions, petrol price had touched an all-time high of ₹ 110.04 a litre and diesel came for ₹98.42. These rates corresponded to Brent soaring to a peak of $ 86.40 per barrel on October 26, 2021. Brent was $82.74 on November 5, 2021, before it started to fall and touched $68.87 a barrel in December.

International oil prices started rising again this year and jumped to a 13-year high of $ 140 per barrel this week.

To compound things, the Indian rupee tumbled to a record low of 77 to a dollar on Monday.

India relies on overseas purchases to meet about 85% of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.

The twin blows of oil prices, already up more than 60% this year, and a weakening rupee may hurt the nation’s finances, upend a nascent economic recovery and fire up inflation.

Petrol and diesel prices need to be increased by ₹15 a litre for fuel retailers to break even, industry sources said.

The basket of crude oil that India buys rose above $126.36 per barrel on March 7, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

This compares to an average of $81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices four months back.

International oil prices started rising again this year and jumped to a 13-year high of $ 140 per barrel this week.

To compound things, the Indian rupee tumbled to a record low of 77 to a dollar on Monday.

India relies on overseas purchases to meet about 85% of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.

The twin blows of oil prices, already up more than 60% this year, and a weakening rupee may hurt the nation’s finances, upend a nascent economic recovery and fire up inflation.

Petrol and diesel prices need to be increased by ₹15 a litre for fuel retailers to break even, industry sources said.

The basket of crude oil that India buys rose above $126.36 per barrel on March 7, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

This compares to an average of $81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices four months back.

International oil prices have been on the boil ever since Russia put its forces on the Ukraine border last month. They spiked after it invaded the Central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory Western sanctions.

While Western sanctions have so far kept energy trade out, a prospect for a full embargo of Russian oil and products is leading to the latest rally in international oil prices.

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