Petrol-Diesel Price Hike: Petrol and diesel prices have been increasing continuously since the last fortnight. This has affected the pockets of the people, but they are not more surprised by the increase this time. In fact, after the record jump in crude oil prices, people already had an idea that fuel prices were going to increase. However, the increase of 80 paise per day has definitely taken him by surprise. They do not understand why the price is increasing by only 80 paise every day?
State-owned oil companies fix fuel prices on the basis of the average price of the last 15 days in the last international market. The new prices are effective from 6 am. During the recently held assembly elections in five states, oil companies did not increase the price of petrol and diesel for a record 137 days. Oil companies started increasing the prices of petrol and diesel again from March 22 and in the last 15 days since then the prices have been increased 13 times. With an increase of 80 paise on April 5, fuel prices have gone up by Rs 9.20 in the last 15 days.
What is the secret behind the figure of 80 paise?
Moneycontrol spoke to three senior executives of oil companies regarding this question. “There is no specific reason behind the increase of 80 paise,” he said. The trio, however, said that a ‘polite request’ from the government to keep the daily hike below Re 1 could be one of the reasons.
The government has said on several occasions that the prices of petrol and diesel are market-determined since June 2010 and October 2014 respectively and that the oil marketing companies – Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are the only ones. determines its prices.
Although the price of crude oil rose from the level of $ 80 a barrel in November to a record level of $ 139 a barrel in March, the oil marketing companies did not increase the price of oil for about four and a half months. This led to speculation that their prices were not being increased in view of the assembly elections held in five states.
Senior dealer K Suresh Kumar said, “Oil companies used to change prices by 10-25 paise every day before elections. However, then they left it at the same level for a long time, which needed to be increased sooner. So they decided to increase it. They are increasing a little less than Re 1 so that the public is not shocked. They can increase Rs 25 at a time for wholesale customers, but it cannot be done for common customers.”
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Emails were sent to oil marketing companies seeking more information on their pricing strategy, to which they did not respond.
Vikas Halan, Associate Managing Director, Corporate Finance Group, Moody’s Investors Services, said, “It is not possible for oil companies to raise prices in one go. The tax measures taken by the government amid huge volatility in oil prices have resulted in a drop in prices. Stability comes. Oil prices in India have remained largely constant or are moving slowly in a particular direction. Not on the pumps.”
Moody’s Investors Service, in a report on March 24, estimated that Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) would lose around $2.25 billion (Rs 19,000 crore) for not raising prices from November to March. ) has lost revenue.
So how many more times will there be an increase of 80 paise now?
Officials of oil companies refused to comment on the question of how much the total increase in oil prices will be or for how many days the trend of increasing 80 paise per day will continue.
A senior official, on the condition of anonymity, said, “On oil companies, the loss is around Rs 25 per litre. This is also evident from the comparison of bulk and retail prices of diesel. There is a general understanding that oil marketing Companies will try to make up for this loss in the next one month and during this period the trend of increasing 80 paise per day is likely to continue.”
An executive of another oil company said that this increase is assuming that crude oil prices will not see the same jump in the coming days as it came in March. However, the price fixing team of all the three oil marketing companies is keeping a close watch on the global crude oil prices.