NEW DELHI: Public sector oil companies increased petrol and diesel prices by nearly 90 paise per litre on Saturday, marking the third hike since May 15. This move aims to partially offset mounting losses from selling fuels below market rates, driven by a sharp rise in global crude prices due to supply concerns.
Under-Recovery Still High
Despite the increase, oil companies still face an under-recovery of 13 on every litre of petrol and 38 on every litre of diesel (both pre-tax), as global prices remain above the $100 per barrel mark. The cumulative increase has now reached just under 5 per litre, which is still lower than hikes seen in many other parts of the world since the war in West Asia triggered a spike in oil prices.
Currently, petrol costs 99.51 per litre in Delhi, while diesel is priced at 92.49 per litre. In Mumbai, a litre of petrol costs 108.49, and diesel is 95.02. Chennai sees petrol at 105.31 per litre and diesel at 96.98, while in Kolkata, petrol costs 110.64 per litre and diesel is 97.02.
CNG Prices Also Rise
With global gas prices on the boil, Indraprastha Gas has announced a fresh Re 1 increase in the price of CNG, taking it to 81.09 per kg in the capital. This is the second hike this week. Prices in neighbouring cities of Noida, Ghaziabad and Gurgaon have also gone up. However, prices of domestic LPG cylinders and piped cooking gas have remained unchanged.
Government Response
After the first hike, the government stated that the cumulative under-recovery on petrol, diesel and LPG had reduced by 25% from 1,000 crore to 750 crore. Retail petrol and diesel prices are linked to global crude prices, which have risen by over 50% since the war began on February 28, disrupting flows through the Strait of Hormuz. The variation in auto fuel prices across states is due to differences in value added tax (VAT) structures.
After keeping petrol and diesel prices unchanged for 75 days despite the rise in crude, oil companies raised prices first on May 15 with a hike of about 3 per litre, followed by another 90 paise increase on May 19. Government officials said the Centre had initially taken a significant hit on revenues to shield consumers, even as fuel prices across the world rose between 10% and 90%. It added that petrol prices in most major developed economies are now above 150 per litre, with several countries retailing it at over 180. An official said most major importing economies had passed on the burden to consumers, with pump prices in several countries doubling over the last 48 months.
