Petrol Breaches Rs 91-Mark, LPG Above Rs 500
Price of petrol on Monday breached the Rs 91-mark in Mumbai, while domestic cooking gas rate touched the Rs 500-level for the first time ever as oil hovers at four-year high.
Petrol prices were hiked by 24 paise a litre and diesel by 30 paise, according to notification by state-owned oil companies. The hike pushed petrol price in Delhi to an all-time high of Rs 83.73 and diesel to Rs 75.09 a litre.
Petrol in Mumbai now costs Rs 91.08 at Indian Oil Corporation outlets, Rs 91.15 at Bharat Petroleum Corporation Ltd. stations and Rs 91.15 a litre at Hindustan Petroleum Corporation Ltd. outlets. Diesel in Mumbai costs Rs 79.72 and Rs 79.79 a litre at Indian Oil and BPCL outlets, respectively.
India is the third largest importer of crude oil and rising international oil prices are inflating domestic transport fuel costs in a strong demand environment. Brent, the benchmark for more than half the world’s oil, rose to the highest since November 2014 on Monday ahead of the U.S. sanctions against Iran kicking in next month.
Brent crude oil climbed to $83.27, up from $71 five weeks back, while the rupee lost ground against the dollar by 5-6 percent during the same period, resulting in expensive crude imports.
Since mid-August, the petrol price has risen by Rs 6.59 a litre and diesel by Rs 6.37— the most in any six weeks after the daily price revision was introduced in mid-June last year.
The domestic cooking gas rates were hiked by Rs 2.89 per 14.2-kg cylinder to Rs 502.40 on account of higher goods and services tax applicable on base price, according to oil companies. This is the fifth straight monthly increase in subsidised LPG rates. It was priced at Rs 491.21 in May.
All consumers have to buy cooking gas at market price. The government, however, subsidises 12 cylinders of 14.2-kg each per households in a year by providing the subsidy amount directly in bank accounts of users.
This subsidy amount varies from month to month, depending on the changes in the average international benchmark LPG rate and foreign exchange rate.
When international rates move up, the government provides a higher subsidy. But as per tax rules, the goods and service tax on LPG has to be calculated at the market rate of the fuel. The government may choose to subsidise a part of the price but tax will have to be paid at market rates. This has led to increase in prices.
The price of non-subsidised or market priced LPG in Delhi was hiked by Rs 59 a cylinder to Rs 879 mainly due to change in international price and foreign exchange fluctuations.
According to Indian Oil, the subsidy transfer in customers’ bank account has been increased to Rs 376.60 a cylinder in October against Rs 320.49 a cylinder in the previous month.
Delhi has the cheapest fuel rates among all metros and most state capitals because of lower taxes. Mumbai has the highest sales tax or value added tax.