New Delhi: Petrol prices have been hiked once again in the country by Rs 2.61 per litre and diesel by Rs 2.71 per litre. This is the fourth increase in less than two weeks. Public sector petroleum marketing companies are raising retail prices of crude oil in line with rising international prices. With the latest hike, the total increase in petrol and diesel prices since May 15 has been around Rs 7.5 per litre. This has raised fears of inflation and rising transportation costs in the economy.
Petrol and diesel costlier by Rs 7.50
According to industry sources, in this latest price revision, petrol has become costlier by Rs 2.61 per liter and diesel by Rs 2.71 per liter. Due to this, the price of petrol in Delhi has increased from Rs 99.51 to Rs 102.12 per liter and diesel from Rs 92.49 to Rs 95.20 per liter. In Mumbai, petrol has become costlier by Rs 111.21 and diesel by Rs 97.83 per liter, in Kolkata by Rs 113.51 and Rs 99.82 per liter, while in Chennai by Rs 107.77 and Rs 99.55 per liter.
Previously, petrol and diesel prices were increased by ₹3 per liter each on May 15, 90 paise per liter on May 19, and 87 paise for petrol and 91 paise for diesel on May 23. Fuel prices vary across states due to local taxes.
Domestic cylinders also became costlier by Rs 60.
According to experts, global crude oil prices have risen by more than 50 percent since the end of February. This is due to tensions in West Asia and supply disruptions through the Strait of Hormuz. During the first two and a half months of the conflict, petroleum companies kept retail prices stable despite rising costs. The government described this as a measure to protect consumers from inflation, while opposition parties accused the government of delaying price increases due to assembly elections in five states, including West Bengal.
The price hike began on May 15, after the ruling Bharatiya Janata Party (BJP) won three of the five state/union territory elections, including West Bengal. Since the price war began, the price of domestic cooking gas (LPG) has risen by ₹60 per 14.2-kilogram cylinder. Compressed natural gas (CNG) prices have risen by ₹4 per kilogram since mid-May.
Shell hikes diesel prices by Rs 25
Despite the price hike, auto fuels like petrol and diesel and domestic cooking gas (LPG) are being sold below cost by the companies. Soon after the public sector companies raised prices, private oil companies like Nayara Energy also increased prices proportionately. Earlier in March, Nayara Energy had increased petrol prices by Rs 5 and diesel prices by Rs 3, while Shell had increased petrol prices by Rs 7.41 and diesel prices by Rs 25 per litre from April 1.
However, Jio-BP, a joint venture between Reliance Industries and BP Plc, has raised its rates at the same rate as public sector companies. Sujata Sharma, joint secretary in the Ministry of Petroleum and Natural Gas, said losses have narrowed to about ₹6 billion (approximately $1.6 billion) per day, down from ₹1,000 billion (approximately $1.6 billion) before May 15. Industry officials say the recent price revisions have been designed to alleviate pressure on petroleum companies without causing a sharp inflationary shock.
However, these increases are bound to put upward pressure on prices. Prashant Vashisht, Senior Vice President and Co-Group Head (Corporate Ratings), rating agency ICRA Ltd., said, “Despite the recent increase in retail fuel prices, petroleum marketing companies’ losses continue to remain high due to widening losses in domestic LPG sales and high crude oil prices.” ICRA estimates that if crude oil prices remain between $120 and $125 per barrel.
And considering the average refining margins over the past 10 years, marketing companies are losing approximately ₹700-800 crore per day on sales of petrol, diesel, and domestic LPG, even after factoring in the recent price hike. “This high level of losses is unsustainable in the long term,” the rating agency said.
