Petrol price hike unlikely

The hike in prices of petrol and diesel seems to have been put on the backburner with the price of the basket of crude oil that Indian refiners buy falling by over $5 over the last week to $68.39 a barrel on Tuesday, the latest day for which data is available.

"The nearly 7 per cent drop in the price of the Indian basket means that fuel prices may not be hiked immediately. We will wait and see," a senior petroleum ministry official said.

With the average price of the Indian crude oil basket, which comprises of Oman-Dubai sour grade crude oil and Brent crude oil in the 58:42 ratio, reigning at $72.69 per barrel in July "" the highest this financial year "" the call for a hike in automobile fuel prices had been growing louder.

However, with the recent softening of prices, the August average is down to $71.18. If the declining trend continues, the likelihood of a hike seems slim, the official added.

Last year, prices were hiked in June when the Indian basket of crude was averaging $67 a barrel. With the appreciation of the rupee, this number "" being taken as a trigger-point for a price increase "" would today be equal to around $74 per barrel.

The country's oil marketing companies "" Indian Oil, Bharat Petroleum and Hindustan Petroleum "" continue to lose around Rs 190 crore a day as they sell petrol, diesel, LPG and kerosene at government-administered subsidised prices.

IndianOil, the largest marketer of petroleum products, is losing Rs 5.33 per litre of petrol, Rs 4.80 per litre of diesel, Rs 14.63 per litre of kerosene and Rs 189.14 for every 14.2 kg LPG cylinder it sells.

Inter-ministerial consultations are on to look at options to provide relief to these companies either through possible retail price hike or via issue of bonds. "The final decision will be politically driven," said the official.

A few days ago, the petroleum ministry sent a note to the Cabinet asking for a hike in petrol and diesel prices in line with international crude oil prices. But the situation stands changed today.