New Delhi, Feb 14 (UNI) The Government today hiked prices of petrol by Rs two and diesel by Re one a litre respectively, in a move that will help save oil marketing companies (OMCs) from bankruptcy but have a cascading effect on essential commodity prices.
Terming the increase as ''restoration'' Petroleum Minister Murli Deora said the hike will be effective from mid-night tonight.
''This is no increase but a restoration of prices that were cut by the same amount in 2006,'' Mr Deora told reporters here.
The government has, however, left retail prices of LPG and Kerosene untouched.
Kerosene is being sold at a loss of Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.
After the hike petrol in Delhi will cost Rs 45.52, Mumbai Rs 50.51, Kolkata Rs 48.95 and Chennai Rs 49.61.
Likewise diesel in Delhi will cost Rs 31.76, Mumbai Rs 36.08, Kolkata Rs 33.92 and Chennai Rs 34.40.
Crude is trading at 94 dollars a barrel later in the day.
Today's move comes in the wake of the Cabinet Committee on Political Affairs (CCPA) approving the recommendation made by the Group of Ministers (GoM).
In February 2007 petrol and diesel prices were cut by Rs two and Re one respectively after Congress President Sonia Gandhi's suggestion and pressure from the Left parties.
The increase in prices by will mean additional Rs 840 crores for the OMCs in this fiscal, Petroleum Secretary M S Srinivasan said.
The news impacted the OMC companies as shares of IOC, HPCL and BPCL soared 13.77 per cent, 15.41 per cent and 11.076 per cent to close at Rs 537.40, Rs 298.40 and Rs 465.80 at the Bombay Stock Exchange.
The government had last increased petrol and diesel prices on June 6, 2006.
IOC is expected to benefit Rs 430 crore to its topline from the price hike.
Petroleum Secretary M S Srinivasan said the under-recoveries for the OMCs in the year would be to the tune of Rs 71,800 crore.
''The under-recoveries could have been as high as Rs 90,000 crore but the dollar depreciation and a good refining margin has bought the figure down,'' Mr Srinivasan said.
He added that with six weeks left for a close of the fiscal year, the increase in price will translate to Rs 840 crore to the topline of the OMCs or 1.2 per cent of total under-recovery.
The government also hiked the share of oil bonds to 57 per cent of the total under-recoveries before March 31 from 49 per cent.
The Secretary said the price revision next year can be much higher.
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