State-owned oil marketing companies (OMCs) may resort to another round of sharp increases in petrol prices, unless and the Centre and the State governments decide to bring down the incidence of duties on crude oil and petroleum products.

According to India's largest refining and marketing agency, Indian Oil, the company is currently losing Rs 1.5-2 on every litre of petrol sold due to the recent spike in crude oil prices.

Bharat Petroleum Corporation (BPCL) has also confirmed similar losses on petrol sales. “The Petroleum Ministry has advocated restructuring of import duty and other Central taxes,” a BPCL official told Business Line .

Crude movement

OMCs last increased petrol prices in mid-January 2011 before the crisis in Egypt erupted, which pushed Brent to over $100 a barrel on January 21. Brent is used as a benchmark in the Indian context.

Though crude prices came down for a short while during February 4-8, Brent has been ruling at over $100 consistently since February 9. What is more alarming is that Brent is now enjoying a 17-20 per cent premium over the WTI variety traded at Nymex, which was traditionally the costliest crude.

“We have been increasing petrol prices in doses since deregulation and could have increased prices once the crude prices started moving up further in January. However, we initially assumed that the spike would not last long. Our expectations (on global crude price movement) were proved wrong,” the IOC Chairman, Mr S.V. Narasimhan, told media persons on Thursday on the sidelines of the Refinery Technology Meet here.

Though he did not comment on the timing or the quantum of increase in petrol price, if any, Mr Narasimhan made it apparent that the company was waiting for the forthcoming Budget announcements to take a call on the issue. “We are requesting for a duty restructuring, including the duty on import of crude oil,” he said.

Rising sharply

Petrol has become dearer by Rs 10.73 a litre or 21 per cent to reach Rs 62.40 a litre (in Kolkata) during the last fiscal. From June 2010, when petrol prices were deregulated, the auto fuel has become costlier by 13 per cent or Rs 7.08 a litre.

Of the current retail price, Rs 28-30 a litre (in excess of 45 per cent) is collected by the Central and State governments as duties and taxes, ranging from import duty on crude to sales tax, cess and others. As many of these duties are charged on an ad valorem basis, when the retail price goes up, the governments collect more revenue on sale of every litre of the fuel.

comment COMMENT NOW