State oil firms to raise petrol prices

Sources said Indian Oil Corp (IOC) has been told to raise petrol prices by 28 paise per litre from midnight tonight,Hindustan Petroleum (HPCL) by 27 paise from Tuesday-Wednesday midnight and Bharat Petroleum (BPCL) by 26 paise from Wednesday-Thursday midnight.

The three OMCs have been told not to make any change in diesel price even though they lose Rs 1.75 per litre at the retail outlets.

The under-recovery in petrol proces — 25 paise per litre – has emerged for the first time in September ever since its pricing was freed from government control in June this year.

Last July,Reliance Industries Ltd moved the Competition Commission of India alleging that OMCs worked as a cartel while pricing their aviation turbine fuel supply to flag national carrier Air India in the regular tenders floated by the National Aviation Company of India.

RIL filed the objection under Sections 3 and 4 of the Competition Act,which pertains to anti-competitive agreement and abuse of the dominant position,respectively.

RIL’s move had coincided with widespread expectation that the OMCs will act as a cartel while revising petrol prices every month in the free pricing regime.

Reliance last month resumed sale at its retail outlets in Gujarat pricing both auto fuels at parity with the OMCs. RIL pumps,about 1,300 across the country,were shut in March 2008 after sales dropped to nil as they could not match the subsidised prices offered by the OMCs.

The Empowered Group of Ministers on June 25 decided to keep the government out of petrol and diesel pricing both at the refinery gate and the retail level leaving the modalities of subsequent retail price adjustments for the industry to decide.

On diesel,the government statement said: “Further increases will be made by the OMCs in consultation with the Ministry of Petroleum and Natural Gas”.

Petrol prices were freed from government control in June,resulting in a Rs 3.50 per litre rate hike in Delhi. The modalities of subsequent retail price adjustments — in line with changes in raw material costs were left for the industry to decide.Though diesel prices were raised by an ad-hoc Rs 2 per litre,it continues to be under government control. “It makes no sense for PSUs to compete among themselves if only petrol prices are being freed. Oil marketing companies (or state-run fuel retailers) will continue to coordinate on the pricing of petrol,” a top oil PSU executive had said.Indian Oil Corp (IOC),Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) were likely to revise petrol prices twice a month.