Fuel Prices on March 26: Petrol, diesel rates raised again

Representative image.

Petrol and diesel prices were hiked by 80 paise a litre each on March 26, the fourth increase in five days as oil firms passed on to consumers the spike in cost of raw material.

This week, the price of retail diesel and petrol has gone up by close to Rs 3.20 a litre. The oil marketing companies (OMCs) have increased the prices by 80 paise a litre each on four days in the last five days since March 22.

Petrol in Delhi will now cost Rs 98.61 per litre as against Rs 97.81 previously while diesel rates have gone up from Rs 89.07 per litre to Rs 89.87, according to a price notification of state fuel retailers. In Mumbai, where the prices are the highest among the metros, retail petrol will cost Rs 113.35 a litre, while diesel will cost Rs 97.55 per litre from March 25.

State run OMCs- Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd(HPCL)- can revise retail petrol and diesel prices daily, based on the rolling average of international benchmark prices over the past 15 days. While prices of fuel sold to bulk consumers and aviation turbine fuel were raised, retail prices of petrol and diesel were left unchanged for almost 137 days even though crude oil prices had increased close to 45 percent in the same period.

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The OMCs announced an 80 paise increase on March 22, the first increase since November 2, 2021. On November 4th, the government announced a Rs 5 per litre cut in excise duty on petrol and a Rs 10 per litre cut in excise duty on diesel to provide relief to customers and cushion them against the soaring international crude oil prices. Subsequently, many states followed suit and cut taxes. Since then, crude oil prices have soared but OMCs left the retail prices unchanged.

In a report on March 24, Moody’s Investors Service said that fuel retailers IOC, BPCL and HPCL have together lost around $2.25 billion (Rs 19,000 crore) in revenue in March by keeping petrol and diesel prices unchanged despite a sharp rise in crude oil prices.

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An increase of $1 in crude prices can result in retail fuel prices rising by 50 to 60 paise per litre, according to industry experts. Crude oil prices have increased by about $38 a barrel since November; this could translate into an increase of Rs 19-24 a litre from the prices where they were frozen. Experts pointed out that the entire increase may not be passed on to consumers and the price rise would be gradual.

The government may step in with a tax cut like they did in November. The duty and taxes account for 40-50 percent of the price and are a major source of revenue for the Centre and state governments. But a cut in taxes would mean a significant loss in revenue to the Centre and the states.