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New Delhi, June 9 (IANS): Oil marketing companies on Tuesday increased the price of petrol and diesel by 54 and 58 paise per litre respectively, the third such successive raise to cover for the rise in global crude prices.
The increase has been made under the dynamic pricing system for daily revision of fuel prices which OMCs resumed after over 83 days break during the lockdown period.
In the national capital, the retail price of both petrol and diesel had increased by 54 and 58 paise to INR 73 and INR 71.17 per litre respectively.
In other cities, the increase could vary depending on the tax structure on products.
IANS had published earlier that daily price revision may begin in June and retail prices of petrol and diesel could go up to INR 5 a litre in phases. In three days it has already gone up by about INR 1.80 per litre.
Prices of transportation fuel were last revised under the dynamic pricing policy on March 16 and there were few instances of price hike only when the respective state governments hiked VAT or cess.
In a bid to increase revenues during the nationwide lockdown, several state governments raised taxes imposed on transportation fuel.
Already, the gap between cost and sale price of petrol and diesel for OMCs has reached around INR 4-5 per litre. If this has to be covered over a period of time, given there is no further increase in global prices, auto fuel prices may be increased by 40-60 paise per day for a couple of weeks to cover the losses.
The increase in retail price under daily price revision would largely depend on prevailing oil prices and global oil market at the time to determine the retail price. Going by current trend, crude prices are way above price levels in April when even benchmark Brent crude had slipped below $20 a barrel. Brent is now trading at over $41 a barrel.
However, lockdown has also curved demand for auto fuel. This could maintain some check on prices.
Raising retail prices became important for OMCs now as the recent steep excise duty hike without resultant increase in petrol and diesel prices, had substantially brought down its marketing margins from record high level of INR 12-18 per litre.
If it is unable to raise prices when the global crude prices are rising, it would start incurring losses that will get steeper.