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Asia:India fuel prices likely to go up next week

Asia:India fuel prices likely to go up next week

Write: Pan [2011-05-20]
Petrol prices in India are likely to move up by at least by Rs 2 next week, according to oil marketing companies.

The government is likely to hike diesel prices on 22 December when the Empowered Group of Ministers (EGoM) meets once the parliament session is over.

The EGoM, headed by union finance minister, Pranab Mukherjee, would be deciding on raising diesel prices.

According to officials of the Petroleum and Natural Gas Ministry, with the deregulation of petrol in June oil marketing companies (OMCs) have been granted the freedom to revise prices on a fortnightly basis.

According to a senior official from the ministry, the petrol prices have been revised four times in less than six months and another hike was in the offing within a day or two with the OMCs are incurring losses in sale of petrol and diesel.

The OMCs are suffering a loss of Rs2 a litre on sale of petrol. The official added that the international crude oil prices ruled at around $72-74 a barrel in June at the time of petrol price de-regulation. The crude price however has risen to $90 a barrel.

Until last week, it was expected that the retail price of petrol would go up by Rs2.50 a litre to fully cover the under-recovery with diesel price rise expected at Rs2 per litre to offset in part the Rs 4.70 per litre under-recovery.

Deora, meanwhile, is said to hoping to pressure EGoM chairman Pranab Mukherjee to release additional funds to OMCs from the second supplementary budget in the form of the government's share towards making good the under-recoveries that OMCs accrue for sale of petrol and diesel at prices below the formula prices.

A hike of up to Rs 2 per litre in petrol prices is on cards this week following international crude oil prices touching $90 per barrel mark.

"We would have raised petrol price on Monday... we had the oil ministry consent to hike prices by Rs 1.90-1.95 per litre immediately after the winter session of Parliament ended yesterday, but at the last moment we are asked to wait for one or two more days," an official of Indian Oil (IOC), the nation's largest fuel retailer, said.

IOC and other state retailers Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) are losing Rs 4.17 per litre on selling petrol as raw material (crude oil) cost has climbed to $90 per barrel