JOIN USFuel price hike in Karnataka imminent after 'artificial' shortage
An 'artificial' shortage of petrol and diesel has set the stage for a price rise of Rs 5 to 7 per litre, as oil marketing companies (OMCs) are suffering losses of Rs 21 per litre of fuel, sources said on Tuesday.
Karnataka consumes about 9.30 lakh tonnes of petroleum products every month. “There is a shortage of supply in Bengaluru and it will be out in the open in a day or two. While the supply from IOC (Indian Oil Corporation), the major supplier, has remained stable, BPCL and HPCL, which together account for about 40% of the total supply to Karnataka, have been unable to meet the demand. One private company will hike it by Rs 7 within two days,” a dealer said.
Karnataka State Federation of Petroleum Dealers (KSFPD) said the two big refiners have cut back on supply due to the losses suffered. Crude oil prices, which crossed $120 in March, were cut by $30/barrel recently by Russia. KSFPD vice president Sanaulla Anees explained that though crude oil prices dropped recently, refineries are receiving the barrels against the bookings made two three months ago when the prices were high.
"As refineries are selling at high prices, OMCs are suffering losses up to Rs 100 crore. There are two ways to stabilise the supply — either the government can hike the price of the fuels to pass on the burden or reduce the excise duty (Union government) and value-added tax (state governments). The same applies to all the states," he said, adding that Nayara Energy Limited and Reliance Industries Limited, the two biggest producers, have reduced output from their refineries.
A Taranath, vice president of the Akhila Karnataka Federation of Petroleum Dealers (AKFPD), said the Bharat Petroleum Corporation Limited has begun rationing of diesel. "From BPCL, we are getting only 50% of the diesel supply when compared with the demand from the last two days. If this continues, many outlets will be dry in two days. HPCL started similar rationing two months ago. We hope the companies in the entire supply chain will come out of the problems," he said.