Petrol, diesel price increase in wait-and-see mode; CNG prices hiked

PSU fuel dealers will monitor the developing situation internationally for a few more days before revising tariffs, three officials said.

PSU fuel dealers will monitor the developing situation internationally for a few more days before revising tariffs, three officials said.

The price of CNG in the state capital and neighboring cities was hiked by ₹0.50 per kg on Tuesday, while an imminent hike in gasoline and diesel prices was put on hold for more clarity on global oil prices.

The price of CNG in NCT in Delhi has increased from ₹56.51 to ₹57.51 per kg, according to information published on the website of Indraprastha Gas Ltd – the company that sells CNG and piped cooking gas in the national capital sells.

Following the firming of international gas prices, IGL has regularly increased CNG prices by up to 50 Paise (₹0.50) per kg. This year alone, prices have risen by around ₹4 per kg.

Apart from Delhi, CNG will be ₹1 more expensive per kg in Noida, Greater Noida and Ghaziabad. From Tuesday it costs ₹59.58 per kg.

Tax rates differ from state to state depending on the level of local taxes.

There is no tariff change in Mumbai, where CNG costs ₹66 per kg.

IGL has not changed the price of pipeline cooking gas supplied to domestic kitchens.

However, a rise in petrol and diesel prices, which was expected after the end of the multi-phase survey in Uttar Pradesh, was unaffected on Tuesday.

Petrol costs £95.41 per liter in Delhi and Rs 109.98 in Mumbai. Diesel costs £86.67 per liter in Delhi and £94.14 in Mumbai.

PSU fuel distributors Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will monitor the developing situation internationally for a few more days before revising tariffs, three officials said.

The decision follows marathon meetings company executives had with Oil Department officials late Monday night.

“We are monitoring the situation closely. We need to see if the current surge in international oil prices is a temporary phenomenon or if it is permanent,” said an executive at one of the three retailers.

Fuel prices have been frozen for the past four months as five states, including politically important Uttar Pradesh, went to the polls. Even so, prices have fluctuated from $81.5 a barrel in early November to almost $140 a barrel on Monday.

International benchmark Brent was trading at around $127 a barrel on Tuesday.

Officials said the government was concerned about the impact of a price increase – both in terms of overall price increases and the political fallout.

“On paper we have the freedom to determine the retail selling price of petrol and diesel. But it is also a fact that we have suffered enormous losses,” said another official.

An industry source said the rate revision freeze was ordered so that daily hikes would not hurt the ruling dispensation’s election prospects.

Since June 2017, fuel prices have had to be adjusted daily to the international reference rate of the previous 15 days. But interest rates have been frozen since November 4, 2021.

The freeze came just as the Modi government cut the excise duty on petrol by £5 a liter and that on diesel by £10 a liter in a bid to bring rates down from record highs. Most state governments also lowered the local sales tax, or value-added tax.

Before these tax cuts, the price of petrol had reached an all-time high of ₹110.04 per liter and diesel was ₹98.42. These prices corresponded to Brent’s rise to a peak of $86.40 per barrel on October 26, 2021. Brent was at $82.74 on November 5, 2021 before starting to fall and $68.87 per barrel in December reached.

International oil prices started rising again this year, jumping to a 13-year high of $140 a barrel this week.

To make matters worse, the Indian rupee fell to a record low of 77 to the dollar on Monday.

India relies on foreign purchases to meet about 85% of its oil needs, making it one of the countries in Asia most vulnerable to higher oil prices.

Double oil prices, already up more than 60% this year, and a weakening rupee could hurt the country’s finances, upending an emerging economic recovery and fueling inflation.

Petrol and diesel prices need to rise by £15 a liter for fuel dealers to break even, industry sources said.

The basket of crude oil that India is buying rose above $126.36 a barrel on March 7, according to information from the Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC).

This compares to an average price of $81.5 per barrel for the Indian crude oil basket at the time of the gasoline and diesel price freeze four months ago.

International oil prices have soared since Russia stationed its troops on the Ukrainian border last month. They rose after it invaded the Central Asian nation amid fears that oil and gas supplies to energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory Western sanctions.

While Western sanctions have so far prevented energy trading, the prospect of a full embargo on Russian oil and Russian products is leading to the recent rally in international oil prices.

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