Elections Over, Petrol, Diesel Prices Must Increase By ₹15 Per Litre: Experts
Petrol and diesel prices have to increase by ₹15 per litre for fuel retailers to break even, industry experts told PTI Monday.
As oil companies plan to reduce losses accumulated from keeping rates steady in the run-up to elections in five states, including Uttar Pradesh.
Oil cos are also looking to offset rising international prices that have skyrocketed as a result of Russia’s invasion of Ukraine; these have touched a 13-year-high of US$140 per barrel with brent crude, at one point, at over US$139 per barrel.
And, to compound matters, the rupee tumbled to a lifetime low of 76.96 against the US dollar. The previous low was 76.90 in April 2020, when the Covid pandemic was beginning.
Oil cos have admitted they are incurring huge losses and insiders told Reuters they expect at least a ₹10 hike in prices if they are to break even. Last week a report by ICICI Securities said it expected a ₹15.1 per litre price increase.
India relies on overseas purchases to meet about 85 per cent of its oil requirements, making it one of the most vulnerable in Asia to rising prices.
The basket of crude oil India buys rose to US$ 117.39 per barrel on March 3, the highest since 2012, according to the oil ministry.
The twin blows – increasing oil prices and a weakening rupee – may hurt the nation’s already struggling finances – which have been affected by Covid and the post-pandemic period – and upend a nascent recovery.
There might be some respite later this year, with the country’s fuel demand expected to increase by 5.5 per cent, but it is unclear if oil cos will be happy reducing prices with an eye on increased sales volumes.
Fuel consumption in 2022-23 is estimated to rise to 214.5 million tonnes from 203.2 million tonnes (expected) in the fiscal year ending March 2022.
An increase in fuel prices after the elections has been feared by many, with Congress MP Rahul Gandhi among those most vocal on the topic.
Last week Gandhi declared people would be well-advised to stock up on petrol and diesel for their cars and two-wheelers because the Modi government would certainly increase prices after polling ended.
Petrol, diesel and LPG (used for cooking) prices skyrocketed last year, earning the government the wrath of the common man and the opposition.
Prices stabilised, expectedly, with elections near but could now increase again.
The conflict in Ukraine, which is now in its 13th consecutive day, has affected prices of several essential goods in the region and around the world; in India, for example, people have been rushing to stock up on cooking oil.