Petrol to become more expensive by Rs 2.96/litre

Get ready to pay more for petrol as oil marketing majors are all set to hike prices by Rs 2.96 per litre effective Tuesday midnight.

BPCL will be increasing prices from tonight itself, while HPCL and IOC will bring in the raised rates from Thursday.

With crude touching USD 90 per barrel, oil companies have been losing around Rs 2 a litre on sale of petrol, so this latest round of hikes will cover the losses incurred by OMCs.

A similar hike of around Rs 2 per litre for diesel is also likely to be considered by an Empowered Group of Ministers headed by Pranab Mukherjee on December 22.

For diesel, OMCs are incurring a loss of Rs 4.71 per litre.

Here is a transcript of Siddharth Zarabi’s report on CNBC-TV18. Also see the accompanying video.

If you look at the overall context, on June 29, petrol was deregulated as a consequence so far petrol prices have been revised upwards four times. This price hike which will come into effect over next 24 to 48 hours will be the fifth increase. Really, a total increase of around Rs 10 plus accumulatively in these 5 rounds. It is effectively an increase of almost 30% over the prior to the deregulation.

The background is rising crude oil prices—crude at USD 90 per barrel—under- recoveries projected at 67,000 crore at current selling prices of petrol. A proposal to also look at diesel that was something considered held back because of inflation fears and the rationale behind the timing is that this very rocky session of parliament is over. Sources suggest that the price hike proposal was actually suppose to happen prior to the winter session of parliament which has just got over. It has now been done because parliament has been adjourned.

Diesel is something that is going to perhaps come up. Again there are reports that suggest that on the December 22 later this month, the EGoM headed by finance minister Pranab Mukherjee will meet again to consider a price hike in Diesel something that has not been done and which has a direct impact on inflation, inflation of course coming in at a comfortable number today but again the prospect of a Rs 2 hike in diesel prices that will be the tough one politically, petrol is already deregulated, the fifth hike is upon us.

We don't know what it will end with the winter season proving to be a tough one across oil consuming markets in the world and that reflecting in the increase in Crude oil prices which according to some analyst are expected to inch closer to the USD 100 mark which is again a mark at which most Indian policy makers start becoming extremely nervous with regard to the impact of Crude on our price situation so clearly fifth round coming in, coming in shortly. Still bellow the projected under recovery of Rs 4.17 that the oil companies say that they are facing as under recoveries at Rs 3 this will be a hike which will perhaps stay for the next 3-4 months at least.