The public sector oil marketing companies have hiked petrol prices by around `5 per litre in Delhi from Saturday midnight. The prices will vary in different cities due to local taxes. The steepest hike in petrol prices comes after Assembly election results for four states and one Union Territory were declared on Friday.
The prices of petrol could again be hiked next month, said a senior petroleum ministry official. This is the second hike in petrol prices this year and the eighth hike since petrol prices were decontrolled in June 2010.
After the hike petrol will cost `63.37 per litre in Delhi against `58.37 per litre earlier. While the petrol prices are no longer under government control, the PSU oil marketing companies were not allowed to hike prices after January due to Assembly elections due to fears that it would have a negative impact on the electorate. The international prices of crude oil have shot up due to the crisis in oil-rich North African and West Asian countries. Before the hike the petroleum companies were losing `10 per litre on the sale of petrol. Bharat Petroleum on Saturday hiked the price by `4.99 per litre and Hindustan Petroleum by `5.01 a litre. Petrol at BPCL outlets currently costs `58.39 per litre and at HPCL pumps `58.38 a litre.
On Wednesday a meeting of the empowered group of ministers on fuel prices, which was to discuss hikes in the prices of diesel, LPG and kerosene, was deferred. The meeting is expected to take place next week. The petroleum ministry is planning to push for a steep hike in the price of diesel and some hike in the prices of LPG and kerosene during the meeting.
The PSU oil marketing companies are losing `16.17 per litre on the sale of diesel, `28.28 per litre on the sale of kerosene and `329.73 on every domestic LPG cylinder. The loss on the sale of these three fuels is around `495 crore per day. Before the petrol price hike, the under-recoveries of the PSU oil marketing companies was expected to reach `2 lakh crore.
The increase in fuel prices is likely to push inflation upwards. Last week, factoring in the fuel price hike, the RBI had said that inflation would remain elevated and close to the March 2011 level (which was 8.98 per cent) over the first half of 2011-12 before declining.
Maintaining the fiscal deficit target is also putting pressure on the government to hike prices.