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The price rise comes a day after oil marketing companies increased petrol prices by Rs 1.69 a litre and diesel prices by 50 paise a litre. While there is no subsidy on petrol and jet fuel, the phased 50 paise/litre rise has widened the revenue loss on diesel to Rs 3.4 a litre According to a Press Trust of India report, the loss stood at Rs 1.62 a litre last month.
The LPG price increase, the first this year, will be for the 13th cylinder a customer buys, after exhausting the quota of 12 subsidised cylinders. The increase, however, isn’t expected to reduce the subsidy on the sale of cooking gas, as more than 90 per cent of the consumption by households is covered through subsidised cylinders, priced at Rs 414 each. Each non-subsidised cylinder will now cost Rs 922.5 in Delhi and Rs 949.5 in Mumbai. Losses on subsidised LPG cylinders rose to Rs 449 from Rs 432.71 in May.
Oil marketing companies are incurring a daily revenue loss of Rs 271 crore on the sale of diesel, kerosene sold through the public distribution system and domestic LPG. Last year, the total revenue loss was Rs 1,39,869 crore, of which 45 per cent was on account of diesel alone. The rise in jet fuel prices will increase input costs for the already struggling domestic airlines, as fuel accounts for as much as 35-40 per cent of their operational costs. More, dollarised costs (including fuel, which is paid for in dollars at the time of import) account for 60-70 per cent of the total cost.
Following the revision, a kilolitre of aviation turbine fuel (ATF) for domestic use will now cost Rs 70,161 in Delhi, against Rs 69,779 last month. Airline executives fear the ongoing crisis in Iraq will lead to a fresh rise in ATF prices; some expect prices to rise four per cent. Domestic airlines, including Air India, Jet Airways and SpiceJet, reported a combined loss of about Rs 10,000 crore in FY14. According to an HSBC Global Research report, unit costs for Indian carriers have risen sharply through the past five years. The two primary factors behind the rise are the rise in ATF prices and depreciation of the rupee.
Last financial year, airlines consumed about 5.5 million tonnes of ATF, with the bulk of sales taking place at the airports in Delhi, Mumbai, Bangalore, Chennai and Hyderabad. For 2013-14, Jet Airways’ fuel bill rose 2.6 per cent compared to 2012-13, while SpiceJet’s fuel expenses jumped 30 per cent.
