Petrol, diesel price unchanged despite 7-month low global oil prices. Here's why
Petrol and diesel prices in India remain unchanged for the fifth straight month after hitting all-time high in April. The price of petrol and diesel remain around the ₹100-mark in most places around the country. The oil retailing companies have not revised rates on a daily basis since April. While it has offered relief to consumers who drive cars and two-wheelers, there is no immediate sign of the price of fuel coming down. This despite international oil prices hitting a seven-month low.
Global crude oil prices have dropped below $90 per barrel for the first time since February. But according to the state-owned fuel retailers, they are still incurring loss on diesel, India's most used fuel for commercial and personal vehicles. This is one of the reasons why there has been no modification in rates. The petrol and diesel prices in India continue to be on freeze for a record 158 days.
The Centre, which earlier reduced taxes on both fuel to halt surging oil prices, linked losses incurred by oil retailers and ruled out any possible reduction in prices in near future. Union minister Hardeep Singh Puri said, "When (international oil) prices were high, our (petrol and diesel) prices were already low," he had said. "Have we recouped all our losses?" He however did not elaborate on the losses incurred on keeping rates steady since April.
The state-run oil retail trio of Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited lost ₹18,480 crore in the June quarter on retail fuel. Recently they broke even on petrol, but continue to incur loss on diesel. The three oil retailers usually revise the price of petrol and diesel daily. When price revision resumed on March 22 as the rates were increased by ₹10 per litre each within two weeks. However, according to BPCL, the increase was not enough to recover cost.
At one point, the fuel retailers were losing ₹20-25 per litre on diesel and ₹14-18 per litre of petrol. "Next month (September) onwards there will be no losses on LPG. We don't have any losses on gasoline (petrol) today," Arun Kumar Singh, Chairman and Managing Director at BPCL, had said last month.
India imports around 85 per cent of its oil from other countries. The global prices directly impact retail prices of petrol and diesel in India. India's crude oil imports cost $88 per barrel on September 8, much lower than the average of $102 in April and $116 in June. Prices started to fall in July when the Indian basket averaged USD 105.49 a barrel.
Petrol currently costs ₹96.72 a litre and diesel ₹89.62 in the national capital. This is down from ₹105.41 a litre price on April 6 for petrol and ₹96.67 a litre for diesel as the government cut excise duty to cool rates.