State-run oil marketing companies have decided to increase the price of petrol by around Rs 2.95 a litre to pass on the impact of rising crude prices, which touched $90 per barrel this week.
“We have decided to increase petrol price by Rs 2.95 a litre effective midnight. The current underrecovery (revenue loss) on petrol is around Rs 4 a litre. Even after this increase, we will be left with a loss of about Re 1 on every litre,” said a senior BPCL executive.
A similar rise in diesel rates is likely to be considered by an Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee later this month. Petrol pricing was decontrolled with effect from June 25 in accordance with the suggestion made by a committee headed by former Planning Commission member Kirit Parikh.
The Indian basket of crude oil has averaged around $88.47 a barrel in December, up by 5 per cent from the November average of $84.26 when the last increase in petrol prices by Re 0.32 a litre came. The current fiscal average price is $78.56 per barrel, up by a sharp 12.61 per cent from the 2008-09 average of $69.76.
However, prices of diesel, kerosene and LPG that together account for over 60 per cent of petroleum products consumption, have not been increased since June 25.
Currently, OMCs are incurring underrecovery (revenue loss) of Rs 4.11 per litre on diesel, Rs 16.88 per litre on kerosene and Rs 272 per cylinder on domestic LPG. Based on the increased crude oil price, they are expected to incur a revenue loss of Rs 65,000 crore in the current financial year on the sale of diesel, domestic LPG and kerosene, up over 22 per cent from the earlier estimate of Rs 53,000 crore.