Oil PSUs may up petrol prices August-end

State-owned fuel retailers Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd are likely to raise petrol prices by “at least” Re 1 per litre towards the end of August due to the northward movement of global crude prices, industry sources said.

According to the sources, a hike in petrol prices is “imminent” because of widening revenue losses as a result of the recent increase in crude prices.

“Petrol price hike is imminent now. Only the quantum of increase will have to be decided. As on August 1, the under-recoveries on petrol stood at 50-60 paise per litre, which is expected to rise further in coming weeks,” a senior official with one of the state-owned fuel retail said.

Sources said state-owned fuel retailers may hold back any price revision in the automobile fuel until the end of the ongoing monsoon session of Parliament.

“The monsoon session ends on August 27, and we expect the petrol price hike to happen immediately after that,” said another source with Indian Oil.

Global crude prices have been rising for the past few weeks on hopes of recovery in energy demand. Crude price for September contract on the New York Mercantile Exchange is currently trading around $82 a barrel.

In a move towards free pricing, the government on June 25 raised petrol prices by Rs 3.5 per litre to help marketers wipe out revenue losses on the fuel.

The oil marketing companies have not revised the prices so far after the June hike, despite the recovery in crude prices.
Every $1 increase in crude oil prices pushes up the price of petrol by 35 paise per litre.

The state-owned fuel retailers are considering revising petrol prices on a monthly basis, but are yet to arrive at a final mechanism.

Industry sources said that though the government has given freedom to the fuel retailers to decide on petrol pricing, it would continue to monitor the quantum and periodicity of price
revisions.

NewsWire18