In one swift move, state-owned oil firms IOC, BPCL and HPCL hiked petrol price by Rs 6.28 per litre effective Thursday. Including sales tax, the hike adds up to Rs 7.50/litre.
The increase was on the cards with the rupee continuing its free fall against the US dollar, but the quantum of the hike took the country by surprise.
Speaking to CNBC-TV18, RK Singh, CMD of BPCL says the hike will be enough to recover only current losses not the ones made in the past. "We hope the company will be allowed to adjust prices every fortnight," he says.
Below is an edited transcript of Singh's interview on CNBC-TV18. Also watch the attached video.
Q: Could you tell us what kind of relief do you expect to see on under-recoveries after seeing that hike in petrol prices and are the petrol losses covered at this point or is more required on that front?
A: Today’s oil price is based on last 15 days average of the crude-end products and also the 15 days average of the foreign exchange rates. There is some misunderstanding that the price increase might cover the past losses. Let me categorically say that that is not the case.
It is based on the last 15 days average price of crude, petrol and the foreign exchange. Now, if there is any change in these three parameters, this should reflect in the next fortnight price that maybe announced, if we are permitted to do so.
Q: That is what I was coming to. Now that you have pretty much at market prices on petrol after a long time, will you move with the market every fortnight or every month or will it move in these lumpy once in six months kind of formula depending on what you are allowed to do?
A: Yes, indeed. We would like to do it after every fortnight. That is the intention and that is what we did for some time. And if you see the last price revision that took place, it was in the form of reduction. If we are allowed to do so every 15 days, sometimes it may go up, sometimes it may come down.
I agree with you that increase will not be so substantial but the fact of the matter is, I have been telling you and you don’t seem to agree with me, that being a government company we cannot ignore the consultation process.
We have to consult the government and that is what we have been doing all these days.