Petrol and diesel prices were hiked today for the first time in over a month on the back of rising international rates and a weakening rupee.
An increase of 16 paise per litre for petrol and 12 paisa per litre for diesel came after an eight day self-imposed hiatus in rate revisions by state-oil firms. The pause in raising rates was on the anticipation that global oil rates would soften after the oil producing countries decided to raise output by 1 million barrels a day.
The price of petrol in Delhi climbed to Rs 75.71 per litre from Rs 75.55 and diesel to Rs 67.50 a litre from Rs 67.38, according to the Indian Oil Corporation Ltd.
The three state-owned fuel retailers, IOC, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd had not revised petrol and diesel prices since June 26.
“We had not changed prices for a few days in anticipation OPEC decision to raise production leading to softening of international rates,” IOC Chairman Sanjiv Singh told PTI. “But the 1 million barrels of additional production, which was to kick-in from July, has been overdone by the Iran issue.”
The Organization of the Petroleum Exporting Countries decided to raise production with the U.S. piling pressure on India, China, and other buyers to end all imports of Iranian oil by November 4. Singh said that Iran produces around 2.3 to 2.5 million barrels per day and searching for alternates to replace that volume has put pressure prices.
Fuel prices in India had hit an all-time high of Rs 78.43 per litre for petrol and Rs 69.31 per litre for diesel on May 30. That peak had triggered demands for a reduction in excise duty but the government had ruled out any immediate cut.
The Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy Value Added Tax - the lowest being in Andaman and Nicobar Islands where a 6 percent sales tax is charged on both the fuel. Mumbai has the highest VAT of 39.12 percent on petrol, while Telangana levies the highest VAT of 26 percent on diesel.
The central government had raised excise duty on petrol by Rs 11.77 per litre and that on diesel by Rs 13.47 per litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell. It then cut the tax just once in October last year by Rs 2 per litre.