Sharp Petrol Price Hike Expected

Authoritatively, the state-run fuel retailers are liberated to modify petrol price in tandem with the fuel's rates in regional bulk markets. But in practice, they do not move until they get a formal signal from the parent oil ministry who are the majority shareholders.

Last modified petrol price was on December 1, when the fuel was at $109 per barrel in regional bulk markets. The ministry signaled the red flag against further tinkering in view of resulting assembly polls. The bulk prices have since topped $130 a barrel, making the companies lose more than 5 on a litre of petrol.

As a consequence, the state fuel retailers are expecting to have amassed loss of over R. 5,000 crore, in the fiscal - 900 crore since the last revision in December. The government would not compensate this loss since petrol is outside the realm of its pricing power, unlike diesel and kitchen fuels.

Although the government may still give the go-ahead for a boost in petrol price under the appeal, it does not have any say on the fuel. It may make revising diesel and kitchen fuels much more complex. Such a revision should takes place only after the budget session, by which time the political dust dribbled up in the assembly polls are likely to clear up.