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Wednesday, October 20, 2021

Oil cos wary of avoiding UK-like situation as petrol, diesel prices hit new highs

According to a price notification of state-owned fuel retailers, petrol saw the third straight hike in prices, rising 25 paise a litre, while diesel rose 30 paise. In Delhi, both fuels hit their highest ever level, with petrol at Rs 102.39 and diesel at Rs 90.77 per litre.

By: ENS Economic Bureau | New Delhi |
October 4, 2021 4:30:20 am
Petroleum Secretary Tarun Kapoor said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided.

Even as petrol and diesel prices saw another price hike on Sunday to reach all-time highs in several parts of the nation, top government officials stressed that oil companies have not passed on the entire increase brought about by global oil and gas prices rising to three-year highs and have made sure that a UK-like situation of fuel pumps running dry does not arise anywhere in India.

According to a price notification of state-owned fuel retailers, petrol saw the third straight hike in prices, rising 25 paise a litre, while diesel rose 30 paise. In Delhi, both fuels hit their highest ever level, with petrol at Rs 102.39 and diesel at Rs 90.77 per litre. In Mumbai, petrol was at Rs 108.43 and diesel Rs 98.48. Prices differ from state to state depending on the incidence of local taxes.

Petroleum Secretary Tarun Kapoor said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided. “We are watching the situation and trying to ensure the impact of global volatility is moderated to a large extent,” he said.

The basket of crude oil India buys has jumped to a near three-year high of $76.71 per barrel. International prices of petrol, against which local rates are benchmarked, have risen from $85.10 per barrel to $87.11 in just one day while diesel has gone up from $85.95 a barrel to $87.27.

“Some people are making a big deal out of the 62 per cent hike in natural gas prices. But if you look at the rates previously at $1.79 per million British thermal unit were abnormally low and way below cost. They have now gone up to $2.9. They still are less than the cost of production of $3.5 per mmBtu and are certainly lower than the $4.2 price that was prevalent in India a decade back,” a government official said.

Naturally, the hike in natural gas price will warrant an increase in CNG price but the increase is again being moderated there too, he said adding internationally the price of LNG in the spot market last week soared to an unprecedented $35.

“Compare to what is happening worldwide, we have managed the situation well,” the official said.

“Some of the developed nations such as the UK have seen petrol pumps go dry but you won’t have heard of such a situation anywhere in India. Our oil companies are not just moderating retail prices but also ensuring uninterrupted supplies.”

Officials said India believes the situation internationally is temporary and abnormal and things should stabilise over the next few days and weeks. The fifth hike in its rates in less than a week’s time has sent petrol prices above Rs 100 in most major cities of the country.

Similarly, the eighth increase in prices in 10 days has shot up diesel rates above Rs 100 mark in several cities in Madhya Pradesh, Rajasthan, Odisha, Andhra Pradesh and Telangana.

State-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) resumed daily price revisions on September 24 after international oil prices neared a three-year high.

Global benchmark Brent crude is trading above $78 per barrel. In eight price increases since September 24, diesel rates have gone up by 2.15 paise per litre. Petrol price has increased by Rs 1.25 per litre in five instalments this week.

With PTI inputes

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