It is feared that the Russia-Ukraine war will spill over into India’s retail fuel prices soon. (Representative Image)
Petrol and diesel prices were unchanged on March 13, remaining stagnant for over 125 days, a notification issued by state-owned fuel retailers showed. Prices have stayed frozen in the past but the current pause is the longest since daily fuel price revision was adopted in June 2017.
The last rate cut was by Delhi when it reduced the local sales tax, or the value-added tax (VAT), on petrol from 30 to 19.4 percent from December 1 midnight, bringing down the price by around Rs 8 to Rs 95.41 a litre. Diesel price remains unchanged in the national capital at Rs 86.67 a litre.
On November 3, the Centre had gone for the deepest excise duty cut ever to cool retail prices from record highs, reducing the duty on petrol by Rs 5 and on diesel by Rs 10. Many states and Union Territories followed the Centre’s lead to give further relief to consumers.
In Mumbai, a November 4 cut reduced the price of petrol to Rs 109.98 a litre, which remains unchanged. Diesel is at Rs 94.14 a litre. While in Kolkata, petrol and diesel prices remain at Rs 104.67 and Rs 89.79. Petrol is at Rs 101.40 and diesel at Rs 91.43 in Chennai.
In Gurugram petrol is Rs 95.48 and diesel Rs 86.70 per litre; Noida petrol Rs 95.73 and diesel Rs 85.21 per litre; Jaipur petrol Rs 107.21 and diesel Rs 90.83 per litre; Lucknow petrol Rs 95.14 and diesel Rs 86.68 per litre; Patna petrol Rs 105.90 and diesel Rs 91.73 per litre.
States and UTs that cut VAT after the Centre reduced excise duty include Ladakh, Jammu and Kashmir, Himachal Pradesh, Delhi, Sikkim, Mizoram, Daman and Diu, Karnataka and Puducherry. Punjab, saw the biggest drop in petrol prices after it slashed VAT the most. The UT of Ladakh has seen the biggest drop in diesel rates.
States that did not lower VAT include Maharashtra, Jharkhand, Tamil Nadu, West Bengal, Kerala, Telangana and Andhra Pradesh.
Price hikes likely soon
Hostilities between Russia and Ukraine, along with sustained demand, is expected to keep global crude oil prices high. Given that India at present imports 85 percent of its crude oil needs, watchers feel a price rise is inevitable and soon.
Experts opine that geopolitical crisis will push India’s domestic prices of petrol and diesel by Rs 15-22 per litre. An excise duty cut may dampen the impact on petrol and diesel prices — but only to an extent.
Further, oil marketing companies (OMCs) are expected to revise current prices as they will look to bridge the Rs 9/litre gap due to international price, i.e. Indian Oil, BPCL and HPCL are making a loss of Rs 5.7 a litre on petrol and diesel. This is without taking into account their normal margin of Rs 2.5 per litre.
JP Morgan in a report said for OMCs need to increase retail prices by Rs 9 a litre or 10 percent this week to revert to normalised marketing margins. It added that prices will need to be increased by Rs 12 per litre by March 16 for fuel retailers to break even.
Benchmark United States crude oil for April delivery rose $ 3.31 to $ 109.33 a barrel on March 11. Brent crude for May delivery rose $ 3.34 to $ 112.67 a barrel.
Wholesale gasoline for April delivery rose 15 cents to $ 3.31 a gallon. April heating oil rose 12 cents to $ 3.42 a gallon. April natural gas rose 10 cents $ 4.73 per 1,000 cubic feet.
(With inputs from The Associated Press)