Petrol, diesel prices increased after 19-day gap

Petrol diesel price on 15th May 2018 Check out rates here city-wise

Petrol diesel price on 15th May 2018 Check out rates here city-wise

"There we go again".

This development, which coincided with the run-up to the Karnataka assembly elections, has brought to the fore an evergreen debate: does the government continue to interfere in the pricing of petrol and diesel despite deregulation? The move comes 2 days after polling was conducted for Karnataka elections.

Prices did not change in the last 19 days, despite rise in worldwide crude oil prices.

OMCs shifted to daily price revision mechanism last June, from the fortnightly rate change dispensation that was in place earlier. It is worth mentioning since June 16, 2017, prices of petrol and diesel are being revised daily.

In the other metropolitan cities of Kolkata, Mumbai and Chennai also petrol prices were at multi-year high levels of Rs 77.50, Rs 82.65 and Rs 77.61 a litre on Monday.

Though the PSU oil companies often freeze fuel prices before polls, the government has denied having any role to play in this.

As per estimates, state-owned oil marketing companies have lost around Rs 500 crore for the period that they absorbed the higher costs of petrol and diesel and the fall of the rupee against the USA dollar. With this, the price of fuel was changed to 2-3 rupees every 15 days. Chairman of Indian Oil Corporation Sanjeev Singh had said last week, "To avoid sharp rise and panic among consumers public sector oil firms were temporarily moderating prices". Before stabilising the prices, it was increasing 25-35 paise every day. "This was unrealistic. So, we thought of stabilising that, tapering it down to a certain extent".

Despite input cost spiking, the Oil PSUs had kept the rates unchanged for almost three weeks. 5 a litre in the last 19 days, an analyst tracking the sector said. Similarly, diesel prices have increased by Rs. 1.59-1.86 per litre. The move was made keeping the day-to-day variation of worldwide crude prices in mind. "Since 2014, excise duty has been increased 11 times and is now equal to the actual price", he said.

However, OMCs kept price revision on hold, apparently on the petroleum ministry's diktat, absorbing under-recoveries on sales of petrol and diesel on their own balance sheets to save the ruling party from embarrassment.

Despite these tweaks, the excise rise has helped the government double its earnings to Rs 2.4 lakh crore in 2016-17 compared to Rs 99,000 crore in 2014-15.

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