Once again petrol, diesel price skyrockets in India

New Delhi, June 25: Amid the tension and panic that has taken place in India, the fuel prices have continued to increase across the country. On Thursday, oil marketing companies increased the price of petrol by 16 paise a litre and diesel by 14 paise a litre.

After the increase in the fuels, petrol was retailing at Rs 79.92 in New Delhi and diesel was selling at Rs 80.02 a litre.

The price of diesel increased for 19th day in a row since the daily revision of prices began in June 7 after a gap of 82 days due to lockdown. However, the price of petrol remained unchanged on Wednesday, after a gap of 17 days.

Reacting to the increased price in fuel, chairman of state-run Indian Oil Corp (IOC), Sanjiv Singh, said that higher diesel price in Delhi was a result of a steep hike in Value Added Tax (VAT) by the state government.

Singh said that VAT is lower in other cities which meant diesel remains cheaper than petrol. "The Delhi government had increased VAT on petrol from 27 per cent to 30 per cent and that on diesel from 16.75 per cent to 30 per cent on May 5," the chiarman of Indian Oil Corp said.

State-owned fuel firms benchmark retail rates to Arab-Gulf international oil prices and a formula decides them, the IOC chairman said, adding that demand dropped drastically in the aftermath of lockdowns imposed across the globe to curb spread of coronavirus, sending oil prices plunging to multi-year low.

This also includes oil futures falling below zero on one day in US trading. Reducing prices in line with that fall was not "sustainable" as cracks - the difference between crude oil (raw material) and petroleum product (finished goods) prices - were running negative.

Singh said the companies returned to revising rates after international markets stabilised. This included passing on the excise duty increase.

Meanwhile, the government has been facing the opposition's ire over the fuel price increase. The Congress has directed state units to stage a sit-in protest at all district headquarters across the country on June 29 against the rising prices of petrol and diesel.