India may hike petrol price from next month
December 26, 2011 00:00:00
NEW DELHI, Dec 25 (Business Standard): Petrol price may be hiked by about a rupee per litre from next month as the Indian currency has weakened against the US dollar making imports costlier.
The rate change may, however, need a political clearance as assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced.
"While international price of gasoline (against which domestic petrol prices are benchmarked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to about Rs 52.70 to a US dollar," a top official said.
The domestic rates, which were last revised on November 30, are pegged at Rs 51.50 to a US dollar exchange rate.
The average exchange rate in first fortnight of December was Rs 51.98 to a US dollar, which has further deteriorated.
State-owned oil companies like Indian Oil Corp (IOC) use fortnightly average of benchmark oil price and exchange rate to revise retail rates on 1st and 16th of every month.
The next review is due on December 31 and if the oil companies decide to pass on the exchange rate fluctuations to consumers, the new rates would be effective from January 1.
"There is an under-recovery of about 85 paise (Rs 0.85) per litre currently. After adding local sales tax, the desired increase in retail prices would be Rs 1.02 per litre," the official said.
Oil firms had, at the last review on December 1516, decided not to burden the consumers with Rs 0.65-0.70 per litre hike in petrol price needed at that time, as they felt Reserve Bank's intervention may help arrest fall in rupee's value.
Petrol at IOC pumps in Delhi is currently priced at Rs 65.64 per litre and the rates vary by a couple of paise at the pumps of Bharat Petroleum and Hindustan Petroleum.
The oil firms had in November cut petrol prices twice on drop in international oil rates. The companies reduced petrol prices by Rs 2.22 per litre, or 3.2%, from November 16, followed by a Rs 0.78 per litre cut from December 1.
