Petrol, diesel price hike likely in May

The government is likely to raise the prices of petrol and diesel in the first half of May. This has been necessitated by the high price of crude oil that Indian refiners buy, which has been hovering around $65 a barrel in April compared to an average $56 per barrel in the January-March quarter.

The quantum of hike had not yet been worked out, but it was likely to be Rs 2 a litre for petrol and Re 1 a litre for diesel, said an official in the petroleum ministry, who did not want to be named.

The price of the Indian basket of crude oil, which comprises Oman-Dubai sour crude oil and Brent dated sweet crude oil in a 58:42 ratio, was at $67.13 per barrel when prices of petrol and diesel were last hiked by Rs 4 a litre and Rs 2 a litre, respectively, in June 2006. 
 

CURRENT RETAIL PRICES                                                    (Rs/litre)
City	Petrol	Diesel
New Delhi	42.85	30.25
Mumbai	48.45	34.97
Kolkata	46.92	32.89
Chennai	47.51	33.32
Bangalore	50.68	35.27
Hyderabad	48.85	33.83
Thiruvanathapuram	46.05	33.73
Ahmedabad	47.76	35.22
Bhubaneshwar	44.58	33.52
Lucknow	46.43	33.67
Chandigarh	44.09	30.62
Source: Indian Oil Corporation

"We will see the May price before taking a decision on the quantum of hike. Our projection is that global prices will remain above $65 a barrel, which would certainly require a hike in the price of petrol and diesel," the official said.

The timing of the hike is being seen as safe, given that the ongoing Assembly elections in Uttar Pradesh would be over by May 8. "Prices of petrol and diesel are politically sensitive and not well received by the voters," another official in the oil ministry said.

The three government-owned oil marketing companies "" Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation "" are losing over Rs 140 crore a day as they are forced to sell diesel, petrol, LPG and kerosene below market price.

LPG prices have not been increased since November 2004, and kerosene prices since March 2002. Losses from sale of kerosene and LPG make up almost 75 per cent of the total losses.

These losses are typically made good by oil bonds issued by the government "" for instance, oil bonds worth Rs 24,000 crore were disbursed to the oil marketing companies in the last financial year "" while a part of the burden is passed on to the consumer.