Why the retail price of petrol had to be increased w.e.f., 16th Jan’11

Feb. 2, 2011 - PRLog -- Based on current price levels in the international oil market, the desired increase in the retail selling prices (RSPs) of petrol in a market like New Delhi should have been Rs.3.72/Lt. However, IndianOil has chosen to soften the impact on the customer by increasing the price by Rs.2.50/Lt. only and not passing on the balance required increase of Rs.1.22/Lr.

Even during the previous revision of the price of petrol with effect from 16th Dec’10, as against the required increase of Rs.4.90/Lt. in the price at New Delhi, the actual increase was confined to Rs.2.96/Lt. thus leaving a gap of Rs.1.94/Lt. in anticipation of a likely fall in the price levels in the global oil market.

However, with the persistent rising trend in the international oil prices, average prices of the Indian crude basket have gone up from $87.83/bbl during the earlier petrol price revision in December to the current level of $92.31/bbl amounting to an increase of $4.48/bbl. Average global prices of petrol during the same period have gone through an even higher increase of $5.17/bbl, rising from a level of $95.30/bbl to $100.47/bbl.

Owing to the substantial increase in oil prices, the Oil Marketing Companies (OMCs) are continuing to incur huge amounts of under-realisations on the sales of other sensitive petroleum products, viz. diesel, kerosene(PDS) and LPG(Domestic). Based on the current price levels in the international oil market, the retail selling prices (inclusive of the tax elements) of diesel, kerosene(PDS) and LPG(Domestic) should have been higher by Rs.7.65/Lr, Rs.19.60/Lr and Rs.366.28/14.2 kg cylinder respectively at New Delhi with corresponding increases across the rest of the country.

IndianOil is currently incurring an under-realisation of about Rs.159 Crore per day on the sales of these three sensitive products. The gross under-realisation for the year 2010-11 is projected to be as high as Rs.40,600 Crore for IndianOil (Rs.73,600 Crore for all the PSU OMCs). The current increase in the retail selling price (RSP) of Petrol was absolutely warranted and necessitated in the context of the above scenario.

For More Details :  http://www.iocl.com/aboutus/NewsDetail.aspx?NewsID=11350&...

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IndianOil Corporation Ltd is India's largest commercial enterprise. The IndianOil Group of companies owns and operates 10 of India's 20 refineries.