Mumbai, Sept 15: Petrol prices have been hiked by Rs. 3.14 a litre effective midnight today. This after state-owned oil firms met the Petroleum Secretary in Mumbai today to make a case for a hike, after the rupee touched a two-year low against the US dollar.
A fall in the value of rupee increases the cost of importing crude oil. The rupee fell to 48 per dollar today for the first time since September 2009.
"Oil retailers are losing Rs. 2.61 per litre or Rs. 15 crore per day on sale of petrol. Together with local taxes, the hike needed to level domestic rates with international prices is about Rs. 3 per litre," a top government official had said on Wednesday.
Petrol prices were decontrolled in June last year, but diesel, domestic LPG and kerosene rates are regulated by the government. Despite de-control, petrol price has not moved in tandem with its cost, keeping in mind the government’s concerns on inflation which climbed to 9.78 percent in August.
Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) have lost Rs. 2,450 crore this fiscal on selling petrol below the cost price. Besides petrol, the three firms are losing Rs. 263 crore per day on selling diesel, domestic LPG and kerosene below cost. Diesel is being sold at a subsidy of Rs. 6.05 a litre, kerosene at Rs. 23.25 per litre while domestic LPG rates are underpriced by Rs. 267 per 14.2-kg cylinder.
The combined borrowing levels of the oil marketing companies has increased from Rs. 96,700 crore in March 2011 to Rs. 120,000 crore in August 2011.