Post poll, petrol price hiked by over Rs 5

Post poll, petrol price hiked by over Rs 5

Steep increase to burn big hole in consumers' pocket

Post poll, petrol price hiked by over Rs 5

The state-owned oil marketing companies (OMCs) hiked retail price of petrol by Rs 5 per litre in Delhi, after the UPA government signalled the end of its “unwritten” instruction not to increase the price until the completion of a tough round of Assembly elections. In Bangalore, the petrol price went up by Rs 5.47 per litre and the revised price is Rs 71.10. The hike, perhaps the highest in recent years, came into effect from midnight.
As such, the OMCs are free to revise price once every fortnight since the government announced the petrol price deregulation last June.

However, there has been no revision since January 15 and privately top officials in OMCs attributed the non-revision to an “unwritten” instruction from the government in view of the assembly elections in West Bengal, Tamil Nadu, Kerala, Assam and Puducherry.
The first announcement on the hike came from Indian Oil Corporation.

“The retail price of petrol has been hiked by Rs 5 per litre,” IOC chairman R S Butola announced on Saturday evening.

Taking a cue from the IOC, the other two state-owned OMCs–HPCL and BPCL–also announced hikes ranging from Rs 4.99 to Rs 5.01 a litre.

There could be further upward revisions soon. The OMCs maintained that they were losing nearly Rs 10 per litre on petrol by not aligning the retail price with global crude price levels. According to them, the retail price has been fixed on the basis of crude oil price at the rate of $95 per barrel whereas the basket of crude oil that India imports is now averaging nearly $110 a barrel. Hence, according to them, there is still a huge “under-recovery.”

Consumer’s burden
While giving its nod for the hike, the Petroleum Ministry is learnt to have directed the OMCs not to pass the entire burden to consumers in one go but to stagger the hike in phases, sources said. “Before today’s (Saturday) revision, the hike needed to make domestic price align with international crude prices was Rs 9.50-10 per litre but we have chosen to hike the price by just half of that,” a highly placed source in the IOC said.
The UPA government, however, continues to face a difficult political dilemma over hiking the prices of diesel, ke­r­osene and domestic cooking gas (LPG).

The pricing of these products was not decontrolled last year. The state-owned OMCs claim that they were currently incurring a loss of over Rs 16 per litre on diesel, Rs 29.69 a litre on kerosene and Rs 329.73 per 14.2 kg domestic LPG cylinder.

The hike drew instant criticism from the BJP and the CPM. The BJP said it would fight against the measure “inside and outside Parliament” while the CPM, which has just suffered an unprecedented electoral debacle in West Bengal and Kerala, called it hypocrisy.

“The petrol price hike exposed the failure of the economist Prime Minister Manmohan Singh,” BJP spokesman Ravi Shankar Prasad said. CPM leader Sitaram Yechury said the price hike was highly condemnable. “This is a cruel hoax on the common people.”