New Delhi, December 31: The state-run oil marketing companies may decide to hike petrol prices by up to Rs 2.25 per litre, in their scheduled meeting on Saturday as the Indian currency has weakened against the US dollar making imports costlier.
If the oil companies decide to pass on the exchange rate fluctuations to consumers, the new rates would be effective from midnight to night.
Oil firms had, at the last review on December 15, decided not to burden the consumers with Rs 0.65-0.70 per litre hike in petrol price needed at that time, as they felt Reserve Bank’s intervention may help arrest fall in rupee’s value.
“While international price of gasoline (against which domestic petrol prices are benchmarked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to over Rs 53 to a US dollar,” a top official said.
The average exchange rate in first fortnight of December was Rs 51.98 to a US dollar, which has further deteriorated.
State-owned oil companies like Indian Oil Corp (IOC) use fortnightly average of benchmark oil price and exchange rate to revise retail rates.
“There is an under-recovery of about 85 paise (Rs 0.85) per litre currently. After adding local sales tax, the desired increase in retail prices would be Rs 1.02 per litre,” the official said.
Petrol at IOC pumps in Delhi is currently priced at Rs 65.64 per litre and the rates vary by a couple of paise at the pumps of Bharat Petroleum and Hindustan Petroleum.
The oil firms had in November cut petrol prices twice on drop in international oil rates. The companies reduced petrol prices by Rs 2.22 per litre, or 3.2 per cent, from November 16, followed by a Rs 0.78 per litre cut from December 1.
However, it remains to be seen if the oil firms will get a political nod to increase the prices in view of assembly elections.
Petrol price was freed from government control in June last year but public sector companies continue to informally consult their parent Oil Ministry before taking a decision.
The government continues to control rates of diesel, domestic LPG and kerosene which were sold way below cost to keep inflation under check. The oil firms lose Rs 12.95 per litre on diesel, Rs 29.99 a litre on kerosene and Rs 287 per 14.2-kg LPG cylinder.