Economy

Govt did not stay OMCs’ hand on price hike: IndianOil chief

Our Bureau New Delhi | Updated on May 22, 2018 Published on May 22, 2018

Sanjiv Singh, Chairman, IOC

We were tracking global prices, and we expected them to soften: Sanjiv Singh

Asserting that the latest round of auto fuel price hikes was mainly driven by global developments, Indian Oil Chairman Sanjiv Singh on Tuesday said the government has so far not issued any directive on holding back fuel price hikes.

He also maintained that the reason the OMCs had held back price increases in the 19 days prior to the Karnataka election was because they expected global benchmark prices to soften. However, that did not happen, and so now the OMCs had to go in for steep price hikes, Singh told reporters.

The government has not asked IndianOil to hold back the price hike post Karnataka election, according to Singh.

Asked why prices had not been hiked for 19 days close to the election, Singh told BusinessLine, “There is no directive from the government as far as the retail price is concerned. Regarding the 19 days, retail prices are driven by the last 15-day global prices of the products. And product prices invariably move in the direction (of) global crude prices, although sometimes there might be differences. During the 19-day period, the spikes on a daily basis were happening and it was likely that the price would not have gone the same way.”

He added: “We decided to moderate prices for a reasonable period; subsequently, we saw that other geopolitical developments were determining crude prices. And that is why not only the crude, even the product prices are moving beyond anybody’s expectation; this is probably reflecting in the retail prices also.”

Industry watchers have pointed out that despite officially allowing oil marketing PSUs to freely price petrol and diesel, the government has been nudging them to hold prices for political considerations. This was highlighted in the run-up to Assembly elections in Gujarat and Karnataka.

Before the Karnataka election, benchmark international rates for petrol moved up from $78.84 a barrel to $82.98 but the retail prices were held at the same levels.

‘Govt taking steps’

Later, addressing journalists, Minister for Petroleum and Natural Gas Dharmendra Pradhan said, “I have been loud enough to raise my voice. The government is concerned and is taking the appropriate steps.”

Pradhan, however, did not specify what steps the government is planning or the timeline to implementthem. The government has said it will take some action to ease the burden on consumers.

Published on May 22, 2018
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