Indian Oil Corp increases petrol rate by Rs2.96 a litre

A day after BPCL raised petrol prices, state-run Indian Oil Corp (IOC), the nation's largest fuel retailer, today increased petrol prices by Rs2.96 per litre effective midnight tonight.

The biggest hike in six months follows international crude oil prices climbing to US$90 per barrel, but it is still short of the desired Rs4.17 a litre increase that would have made domestic prices on par with market rates.

Bharat Petroleum Corp Ltd (BPCL) had yesterday announced a hike of Rs2.95 per litre in petrol prices in Delhi, with effect from today. Hindustan Petroleum Corp Ltd (HPCL), the third state fuel retailer, also increased petrol prices by Rs2.94 per litre effective midnight tonight.

"Petrol at IOC pumps in Delhi will cost Rs55.87 per litre from midnight tonight," a company official said.

The fuel at HPCL pumps would be sold at Rs55.85 per litre while it is priced at Rs55.86 a litre at BPCL pumps.

The state-retailers are deliberately adopting marginally different rates and effecting hikes at different times to avoid being accused of acting as a cartel in the free market.

The government had in June this year freed petrol prices, but the state firms, who control 98% of the retail market, continue to informally consult the oil ministry before revising prices.

Sources said a Rs2 per litre hike in diesel prices is on the agenda of an Empowered Group of Minister headed by finance minister Pranab Mukherjee when it meets on December 22.

The oil firms are losing Rs 5.40 per litre on selling diesel below import cost, sources said. 

Petrol in Mumbai will cost Rs60.46 a litre at IOC pumps as ag ainst Rs57.35 a litre currently. In Kolkata, the hike is of Rs3.09 to Rs59.90 per litre while in Chennai the price have been hiked to Rs 60.65 per litre from Rs57.44 a litre.

The oil firms had on June 26 raised petrol price by Rs3.50 a litre, coinciding with the government decision to make the rates market determined.

After today's increase, petrol prices have gone up by Rs4.44 a litre since deregulation.

The basket of crude oil India buys has averaged US$88.47 per barrel in December as against about US$79 a barrel at the time of last hike in petrol price on November 9. The oil firms had raised petrol price by Rs0.32 a litre just before the Parliament's winter session began.

If diesel prices are not revised, IOC, BPCL and HPCL are likely to end the fiscal with close to Rs67,000 crore revenue loss. This figure includes loss on account of selling domestic LPG and kerosene below cost.

The oil retailers lose Rs272.19 on the sale of every 14.2-kg LPG cylinder and Rs17.72 per litre of kerosene.