Petrol price expected to be hiked

The Oil Manufacturing companies are back with their plea to increase the petrol price after a period of 4 months. The OMCs are required to revise the fuel prices every now and then to regulate the oil company financials. According to the latest report, the under-recovery of the fuel is expected to rise to Rs3.40 a liter from current Rs 1 by end of this week. Apart from petrol, the price of the aviation turbine fuel (ATF) is also likely to increase from Rs 56, 260 per Kl by Rs 1,250. An under-recovery price the difference between the retail price and the trading parity price of the fuel.

The weakening rupee and the international petroleum product price have together contributed to the losses incurred by the OMCs, under-recovery on the diesel is also expected to increase from Rs 1.25 to Rs 6 per liter in the second half of September. The government had lifted the subsidy on the petrol in June, 2010 and the last hike on the petrol price was done on May 15th by Rs 5, while the companies were bearing the rest of the loss of Rs 5. In a due course of time post the hike, the companies even began to make marginal profits after June 2010.

On June 24th, 2010, after decontrolling the diesel price, there has been a raise in the prices of diesel, kerosene and LPG as well. The Petroleum manufacturing companies like, Indian Oil, Hindustan Petroleum and Bharat Petroleum purchase the crude oil at the set market rates and retail it at government set prices, there-by incurring the losses to fill-in the gap. All the three PMCs are reported to have faced losses in the April-June period as the government has not intervened to make up for the companies losses. The buffering price on the fuel is calculated based on the trade parity for the previous fortnight.