Petrol price hiked by Rs 2 per litre due to weak rupee

Petrol price was on Saturday hiked by a steep Rs 2 a litre, the second increase in rates this month, as devaluation of rupee against US dollar made imports costlier.

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The hike, which is effective from midnight tonight, is excluding local sales tax or VAT and actual increase for consumers will be higher.

Petrol price in Delhi was hiked by Rs 2.40 a litre to Rs 66.39 from Rs 63.99 previously.

This is the second increase in rates this month. Oil firms had from June 1 hiked prices by 75 paisa, excluding VAT.

However unlike last time, there will be no change in price of diesel.

In Mumbai, petrol price has been increased by Rs 2.52 to Rs 74.60 while in Kolkata rates went up from Rs 71.29 to Rs 73.79 per litre. In Chennai, prices were hiked by Rs 2.54 to Rs 69.39.

"Since last price change, the slide in Rupee (against the US dollar) has continued and the USD-INR Exchange rate has deteriorated from Rs 55.32 to Rs 57.08 per USD," said Indian Oil Corp, the nation's largest oil firm.

IOC said international petrol prices have also hardened during this period. "The combined impact of both these factors, mainly depreciation of the rupee, has warranted the increase in petrol prices by Rs 2 per litre (excluding VAT)," it said in a statement.

The June 1 increase in petrol price was the first in three months. The previous hike was on March 1, which was followed by rates being cut four times on falling global oil prices.

Diesel prices has been hiked on five occasions since January when the government authorised state-owned oil firms to increase prices by up to 50 paisa per litre every month till entire losses on the fuel are wiped out.

Since diesel price was hiked by 50 paisa, excluding VAT, on June 1, the next increase will happen at the month end.

IOC said the devaluation of rupee has led to widening of losses on diesel and cooking fuel.

Losses on diesel has widened to Rs 6.31 a litre from Rs 4.87 at the beginning of the month. Besides, oil firms are also losing Rs 27.75 per litre on kerosene and Rs 335.14 on sale of every 14.2-kg domestic cooking gas (LPG) cylinder.

The company said at current rate IOC would end the fiscal with a total revenue loss of about Rs 60,000 crore while the industry (IOC plus other state-owned fuel marketing firms) would incur around Rs 112,500 crore loss.

"The movement in international oil markets and INR-USD exchange rate has been put on a close watch and developing trends will be reflected in future price changes," it added.