Petrol price may be hiked by Rs 1 next month
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 15/16, 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 per cent, from November 16, followed by a Rs 0.78 per litre cut from December 1.
However, it remains to be seen if the oil firms will get a political nod to increase the prices in view of assembly elections.
Petrol price was freed from government control in June last year but public sector companies continue to informally consult their parent Oil Ministry before taking a decision.
The government continues to control rates of diesel, domestic LPG and kerosene which were sold way below cost to keep inflation under check. The oil firms lose Rs 12.95 per litre on diesel, Rs 29.99 a litre on kerosene and Rs 287 per 14.2-kg LPG cylinder.
PTI