Petrol Price Nears Rs 80 A Litre, Diesel At New High After 16th Price Hike In A Row
Employees wearing personal protective equipment refuel a vehicle at a Hindustan Petroleum Corp. gas station in New Delhi, India. (Photographer. T. Narayan/Bloomberg)

Petrol Price Nears Rs 80 A Litre, Diesel At New High After 16th Price Hike In A Row

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Petrol prices were hiked by 33 paise per litre and diesel by 58 paise on Monday, taking the cumulative increase in rates in 16 days to Rs 9.21 a litre and Rs 8.55 respectively in a 16-day period.

Petrol price in Delhi was hiked to Rs 79.56 per litre from Rs 79.23 while diesel rates were increased to Rs 78.55 a litre from Rs 78.27, according to a price notification of state oil marketing companies.

Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or Value Added Tax.

The increase in rates since June 7 is the highest in any fortnight. According to pricing data, the maximum rates have increased in any fortnight was Rs 4-5 per litre.

When petrol and diesel pricing was deregulated in April 2002, oil companies revised rates every fortnight in line with the cost. They switched to daily price revision in May 2017 to allow cost to reflect instantaneously in retail rates.

Also read: Buyer Beware: Oil Stockpiles Are Enormous

The sixteenth daily increase in rates since oil companies on June 7 restarted daily price revisions after ending an 82-day hiatus, has taken diesel prices to fresh highs. Petrol price too is at a two-year high.

Prior to the current rally, the peak diesel rates had touched was on October 16, 2018, when prices had climbed to Rs 75.69 per litre in Delhi. The highest-ever petrol price was on October 4, 2018, when rates soared to Rs 84 a litre in Delhi.

When rates had peaked in October 2018, the government had cut excise duty on petrol and diesel by Rs 1.50 per litre each. State-owned oil companies were asked to absorb another Rs 1 a litre to help cut retail rates by Rs 2.50 a litre.

Oil companies had quickly recouped the Re 1 and the government in July 2019 raised excise duty by Rs 2 a litre.

Taxes make up for nearly two-third of the retail selling price. As much as Rs 50.69 per litre, or 64%, in petrol price is due to taxes -- Rs 32.98 is the central excise duty and Rs 17.71 is local sales tax or VAT.

Over 63% of the retail selling price of diesel is taxes. Out of the total tax incidence of Rs 49.43 per litre, Rs 31.83 is by way of central excise and Rs 17.60 is VAT.

In Mumbai, petrol price has gone up from Rs Rs 86.04 per litre to Rs 86.36 on Monday. Diesel rates have increased to Rs 77.24 a litre from Rs 76.69 a litre, according to the price notification.

The 82-day freeze in rates this year was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.

The government on March 14 hiked excise duty on petrol and diesel by Rs 3 per litre each and then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenues.

State-owned oil refiners Indian Oil Corp Ltd., Bharat Petroleum Corp Ltd. and Hindustan Petroleum Corp Ltd., instead of passing on the excise duty hikes to customers, adjusted them against the fall in the retail rates that was warranted because of fall in international oil prices to two-decade lows.

International oil prices have since rebounded and oil firms are now adjusting retail rates in line with them.

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