Petrol price hiked by Rs 7.50 a litre

The decision of the oil marketing companies effective midnight tonight is the steepest hike in petrol price ever,the previous increase being Rs 5 per litre.

Petrol price in Delhi has been hiked by Rs 7.54 per litre to Rs 73.18 a litre. In Mumbai it will cost Rs 78.57 per litre as against Rs 70.66 a litre. In Kolkata,Rs 77.88 per litre and Chennai Rs 77.53 a litre.

Oil firms had twice raised rates by Rs 5 per litre – on May 15,2011 when prices in Delhi were hiked from Rs 58.37 a litre to Rs 63.37 per litre and on May 24,2008 when rates were raised to Rs 50.56 a litre.

The hike came under all round attack from political parties but significantly DMK,which is part of the government,sought its rollback.

Samajwadi Party,whose leader Mulayam Singh was the centre of attention at the UPA anniversary celebrations last night,also attacked the decision and demanded rollback.

“I will ask for it,” was DMK President M Karunanidhi’s terse reply when reporters in Chennai wanted to know whether he will demand a rollback.

TMC Chief and West Bengal Chief Minister Mamata Banerjee,who had on earlier occasions threatened withdrawal of support on the issue of fuel price hike,reacted today saying,”the increase is unjust and unilateral”.

Finance Minister Pranab Mukherjee maintained that the decision was taken by oil companies as petrol is a deregulated commodity.

The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14.5 per cent and 3.2 per cent fall in value of rupee against the US dollar.

Yesterday,Oil Minister S Jaipal Reddy had stated that the depreciation in rupee had necessitated an immediate increase in fuel prices.

But rates of diesel,kerosene and cooking gas have not been revised as a high-power ministerial panel headed by Finance Minister Pranab Mukherjee and having representatives of key UPA allies like TMC and DMK,hasn’t met for almost a year now.

Price of diesel,kerosene and cooking gas were last raised in June last year.

However,Banerjee said her party would not topple the government like the CPM as it would create economic and political instability in the country.

“We cannot accept the price hike burden on the people,” she said asking why there was no consultation on the issue.

BJP and other opposition parties including the Left called it “unreasonable” and a big burden on the common and threatened agitation against it.

“We demand immediate rollback of petrol price hike. The decision is anti-people,” SP spokesman Rajendra Chowdhury said.

Terming the steep hike in petrol price as “unreasonable”,BJP spokesperson Prakash Javadekar said,”We condemn the petrol price hike and seek its rollback. We will not allow it to happen. A strong democratic agitation is on the cards”.

“It is a cruel blow on people who are already suffering from severe price rise. The Left parties have called upon all party units to immediately organise powerful protest actions,” CPI-M General Secretary Prakash Karat said.

“If rupee depreciates by one against the US dollar,our oil companies lose Rs 8,000 crore (annually),” Reddy had said yesterday. “Rupee yesterday dipped (to an all-time low of) Rs 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs 72,000 crore (on account of rupee depreciation) this year.”

State-owned oil firms,which had in the fiscal ending March 31,2012 lost Rs 4,860 crore on petrol sales,were currently losing Rs 6.28 per litre on petrol. After including 20 per cent VAT,the desired increase in petrol price in Delhi came to Rs 7.54 a litre.

The losses on petrol are besides Rs 512 crore per day that oil firms lose on selling diesel,domestic LPG and kerosene. Diesel is currently sold at a loss of Rs 15.35 a litre,kerosene at Rs 32.98 per litre loss and oil firms lose Rs 479 on sale of every 14.2-kg domestic LPG cylinder.

The three firms had together lost Rs 138,541 crore in revenue in 2011-12. This year they are projected to lose a record Rs 193,880 crore.

During 2011-12,petrol prices were revised five times in order to bring domestic prices in line with prices in the international market. Of these,rates were hiked on three occasions and lowered on two other. The last revision in rates on December 1 was a reduction of Rs 0.78 per litre to Rs 65.64 a litre.

“Thereafter,due to domestic market conditions,it has not been possible to change selling price of petrol in line with international prices,” Indian Oil Corp (IOC),the largest oil retailing firm in the country,said in a statement.

IOC along with Bharat Petroleum and Hindustan Petroleum lost Rs 4,651 crore in revenue since the last revision.

Petrol hike announcement draws ire of public

“Are the fuel pumps pouring petrol or gold?”

This was among the many angry reactions from Delhiites to the government’s announcement to hike petrol prices.

Many of them contemplated shunning their cars and avail services of Metro so that their pockets are not hit hard. As the government announced a Rs 7.50 per litre hike in petrol price from midnight,anger was written on the faces of many faces.

“Its not just about my car bills. What will be the effect of this hike? It will lead to price rise. Everything will now cost a bomb. Is it petrol or gold?” Jatin P A,a media professional,said.

Many office-goers are also now planning to move to Metro.

“I don’t have a Metro station near my house. It is seven km from my house. I used to take my car. Now I can’t. Because I will end up spending at least Rs 2,000 extra if I use car. I will have to switch to Metro,” Madhumita Misra,an accountant residing in Indrapuram and works in Connaught Place,said.

In the steepest ever hike,petrol price was increased today by Rs 7.50 a litre with effect from midnight tonight.

State-owned oil firms said they will raise petrol price by Rs 6.28 per litre excluding local sales tax or VAT. The hike translates into Rs 7.50 per litre in Delhi. Petrol in Delhi currently costs Rs 65.64 a litre and after the increase it will be priced at Rs 73.14 per litre.

“I was planning to buy a car. If petrol price is sky rocketing like this,I have to rethink. I can’t spend substantial part of my earnings on petrol,” said Blesson Mathews,a junior software professional,said.

Auto industry fumes over petrol price hike

The automobile industry has hit out at the petrol price hike saying the increase will hurt the sector which is already reeling under a slump.

“Petrol cars are not selling as such already. With this record hike,the situation will go from bad to worse,” Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen said.

In the short-term,sales will be further impacted while in the long term a negative consumer sentiment will be created which can hurt the growth of the industry,he added.

Expressing similar sentiments,General Motors India Vice President P Balendran said: “Earlier,the industry was expecting a growth of 8-10 per cent this fiscal but I will not be surprised if we are in the negative territory due to fuel price hike and high interest rates as the market continues to be sluggish.”

This will result in inventory pile up of petrol vehicles as more and more consumers will opt for diesel vehicles,he added.

Describing the latest price hike as a “disaster”,Maruti Suzuki India Managing Executive Officer,Marketing and Sales Mayank Pareek said: “This will further increase the skew between petrol and diesel vehicle demand,which is already very wide. This will severely affect the sales of entry level cars,which are mainly petrol driven.”

Last year,the petrol segment declined by 16.2 per cent as the demand shifted to diesel vehicles. Now there will be more demand for diesel cars after the price hike but most of the manufacturers are running on full capacity for diesel vehicles,he added.

Pareek said the overall impact of the price hike would further dent growth of the automobile industry.

Hyundai Motor India Ltd Director Marketing and Sales Arvind Saxena said: “Demand is already under pressure on account of inflation and high interest rates. A hike of such magnitude is neither good for the customer nor for industry.”

Passenger car sales in India witnessed the slowest growth during April in 10 years at 3.4 per cent as customer sentiment remained low due to post-Budget price hikes and high interest rates,affecting the entry-level segment most.

As per SIAM figures,domestic passenger car sales stood at 1,68,351 units in April 2012 compared to 1,62,813 units in the same month last year.

In the fiscal 2011-12,car sales in India grew by just 2.19 per cent which was the slowest since 2008-09.

Ficci welcomes petrol price hike,wants action on other items

Welcoming the petrol price hike,industry body Ficci said that government should deregulate the prices of other fuel products like kerosene,diesel and cooking gas.

In the steepest ever hike,petrol price was increased today by Rs 7.54 a litre with effect from midnight tonight.

“However,this increase,welcome as it is,will only partially cover the under recoveries on account of kerosene (Rs 31 per liter),diesel (Rs 13.64 per liter) and Rs 479 for each cylinder of LPG. It is time that government allows these prices also to move to their market-determined level,” it said in a statement.

It said the argument that kerosene is used by the poor is no longer valid as experience has shown that its greatest use is unfortunately in fuel adulteration.

“Rationalisation of petroleum products prices will provide the necessary incentives for the development of alternative and renewable sources of energy,encourage conservation and more important improve the fiscal balance,” Ficci said.

The chamber said the inflationary impact of such an increase is once for all and therefore transitory.

“The increase had perhaps become inevitable with the continued slide in Rupee’s exchange rate,” it said,adding “it can be mitigated by reduction in taxes both by the central and state governments”.

Ficci hoped all political parties will support the move towards the rationalisation of the entire spectrum of petroleum prices.

However,Assocham said “the steep rise in petrol prices will be another blow to the already crippling economy”.

The government ought to have also taken steps to de-control the diesel prices except for the target group of farmers,railways and public transport to ease the burden of subsidy on the economy,it said.

“Increase in petrol is not likely to give much relief to the government’s swelling fiscal deficit efforts and in mending the economy,” it said,adding “this step will increase inflation and prove a big burden on the common man”.

The suppressed inflation on account of subsidy on diesel will continue to be painful for the government,the chamber said.

City / Revised Price / Increase

Delhi 73.18 / 7.54

Kolkata 77.88 / 7.85

Mumbai 78.57 / 7.91

Chennai 77.53 / 7.98

(All rates in Rs/litre)

OilMin calls for fuel price hike on plunging rupee

With rupee depreciation leading to jump in oil import bill,Petroleum Minister S Jaipal Reddy on Tuesday said there is an immediate need to raise fuel prices,but refused to say when the hike will actually take place.

“It (price increase) is very essential but (before hiking rates) we have to talk to political parties,” he told reporters here on way to Ashgabat for signing of the agreement for the Turkmenistan-Afghanistan-Pakistan-India pipeline.

The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar.

Price of diesel,kerosene and cooking gas were raised in June last year.

“If rupee depreciates by one against the US dollar,our oil companies lose Rs 8,000 crore (annually),” Reddy said.

“Rupee yesterday dipped (to an all-time low of) Rs 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs 72,000 crore (on account of rupee depreciation) this year.”

“Seeing all this,something needs to be done,but when will it be done,how it will be done… I cannot make a forecast,” Reddy said. “There is no decision on raising price or not raising prices”.

State-owned oil firms,who had in the fiscal ending March 31,2012 lost Rs 4,860 crore on petrol sales,are currently losing Rs 6.28 per litre on petrol. After including 20 per cent VAT,the desired increase in petrol price in Delhi comes to Rs 7.53 a litre. “The three oil marketing companies (Indian Oil,Hindustan Petroleum and Bharat Petroleum) together have lost about Rs 2,650 crore in the first two months of current year,” an official of IOC said.

Petrol price were last revised on December 1 when they were cut by Rs 0.65 a litre to Rs 65.64 in Delhi. Price of gasoline in the international market,against which the domestic rates are benchmarked against,was USD 109.03 a barrel at that time. Today they are around USD 125 per barrel.

Rupee had averaged 51.50 to a US dollar. Today is it over 55 to a US dollar.

The losses on petrol are besides Rs 512 crore per day that oil firms lose on selling diesel,domestic LPG and kerosene. Diesel is currently sold at a loss of Rs 15.35 a litre,kerosene at Rs 32.98 per litre loss and oil firms lose Rs 479 on sale of every 14.2-kg domestic LPG cylinder.

The three firms had together lost Rs 138,541 crore in revenue in 2011-12. This year they are projected to lose a record Rs 193,880 crore.

With government not allowing oil firms to raise fuel prices due to political considerations,the state-owned companies have demanded that petrol be made a regulated product temporarily and losses on it be made good through cash subsidy support from the exchequer.

Alternatively,excise duty on petrol of Rs 14.78 a litre should be reduced by an amount equivalent to the current loss on the fuel sale. Simultaneously,states should also reduce the rates of Sales Tax,which vary from 15 per cent to 33 per cent (Rs 10.30 to Rs 18.74 per litre).