Increase in gasoline and diesel prices in wait-and-see mode; GNC Rates Rise, Auto News, ET Auto

Fuel consumption, a proxy for oil demand, totaled 18.43 million tonnes, up 7.6% from November and 0.4% from a year earlier, according to data from the Petroleum Planning and Analysis Unit of the Ministry of Petroleum.

New Delhi:

The price of CNG in the nation’s capital and nearby towns rose by INR 0.50 per kg on Tuesday, while an impending increase in the price of petrol and diesel was put on hold for clarity on the world oil prices. The price of CNG in Delhi’s NCT has been raised to INR 57.51 per kg from INR 56.51, according to information posted on the website of Indraprastha Gas Ltd – the company that retails CNG and piped cooking gas in the nation’s capital.

Following the tightening of international gas tariffs, IGL has periodically increased CNG tariffs up to 50 paise (INR 0.50) per kg. Prices have increased by around INR 4 per kg this year alone.

Outside Delhi, CNG will cost Re 1 per kg more in Noida, Greater Noida and Ghaziabad. From Tuesday it will cost INR 59.58 per kg.

Rates differ from state to state depending on the incidence of local taxes.

There is no rate change in Mumbai, where GNC costs INR 66 per kg.
IGL has not changed the price of piped cooking gas supplied to household kitchens.

However, a rise in petrol and diesel prices, which was expected after the end of multi-phase polling in Uttar Pradesh, was unaffected on Tuesday.

Gasoline costs INR 95.41 per liter in Delhi and INR 109.98 in Mumbai. Diesel costs INR 86.67 per liter in Delhi and INR 94.14 in Mumbai.

Fuel retailers PSU Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will monitor international developments for a few more days before revising tariffs, three officials said.

The move follows marathon meetings company executives held with Oil Ministry officials late into Monday night.
“We are monitoring the situation closely. We need to see if the current surge in international oil prices is a temporary phenomenon or if it is here to stay,” said a senior executive at one of the three retailers.

The situation, he said, will be monitored for “a few more days” before a decision is reached on the price review.

Fuel prices have frozen over the past four months as five states, including politically important Uttar Pradesh, head to the polls. Despite this, prices fell from 81.5 USD per barrel in early November to almost 140 USD per barrel on Monday.

International benchmark Brent was trading around USD 127 a barrel on Tuesday.
Officials said the government was concerned about the impact of a price increase – both in terms of general price increases and its political fallout.

“On paper, we have the freedom to decide the retail price of petrol and diesel. But it is also a fact that we have suffered huge losses,” said another official.

An industry source said the rate review freeze was ordered so daily increases would not affect the ruling regime’s election prospects.

Since June 2017, fuel prices must be adjusted daily according to the international reference rate of the previous 15 days. But rates have been frozen since November 4, 2021.

The freeze came just as the Modi government slashed excise duties on petrol by INR 5 per liter and those on diesel by INR 10 per litre, to drive rates down to record lows. Most state governments have also reduced local sales tax or VAT.

Prior to these tax cuts, the price of petrol was at an all-time high of INR 110.04 per liter and diesel stood at INR 98.42. These rates corresponded to Brent surging to a high of $86.40 a barrel on October 26, 2021. Brent was at $82.74 on November 5, 2021, before starting to decline and touching 68.87 USD per barrel in December.
International oil prices have started to climb again this year and hit a 13-year high of USD 140 a barrel this week.

To make matters worse, the Indian rupee fell to a record high of 77 to the dollar on Monday.

India depends on foreign purchases to meet around 85% of its oil needs, making it one of the most vulnerable countries in Asia to rising oil prices.

The double hit in oil prices, already up more than 60% this year, and the weakening of the rupee could harm the country’s finances, disrupt a nascent economic recovery and boost inflation.

Petrol and diesel prices need to be increased by INR 15 per liter for fuel retailers to break even, industry sources have said.

The basket of crude oil that India is buying rose above $126.36 a barrel on March 7, according to information from the Petroleum Ministry’s Petroleum Planning and Analysis Cell (PPAC).

This compares to an average of $81.5 per barrel of the Indian crude oil basket at the time of the gasoline and diesel price freeze four months ago.

International oil prices have been on a boil since Russia deployed its forces to the Ukrainian border last month. They rose after the invasion of the Central Asian nation over fears that the Russian energy giant’s oil and gas supply could be disrupted, either by the conflict in Ukraine or by retaliatory Western sanctions.

While Western sanctions have so far impeded energy trade, the prospect of a full embargo on Russian oil and goods is driving the latest rise in international oil prices.

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“India is facing a double shock. Crude oil prices are soaring and the rupee is depreciating against the dollar. Prices for sunflowers, edible oils, iron ore and metals are also soaring. Markets Fellows may continue to be upset for days to come,” Vakharia said.


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