Petrol price to rise by Rs1 to Rs1.5 a litre

With the parliament session over, the government is likely to hike diesel prices on 22 December when the Empowered Group of Ministers (EGoM) meets. However, petrol prices are expected to go up by Re1 to Rs1.50 in a day or two.

According to officials of the Petroleum and Natural Gas Ministry, with the deregulation of petrol in June oil marketing companies (OMCs) have been granted the freedom to revise prices on a fortnightly basis. According to a senior official from the ministry, the petrol prices have been revised four times in less than six months and another hike was in the offing within a day or two with the OMCs are incurring losses in sale of petrol and diesel.

The OMCs are suffering a loss of Rs2 a litre on sale of petrol. The official added that the international crude oil prices ruled at around $72-74 a barrel in June at the time of petrol price de-regulation.  The crude price however has risen to $90 a barrel.

The EGoM, headed by union finance minister, Pranab Mukherjee, would be deciding on raising diesel prices.

Until last week, it was expected that the retail price of petrol would go up by Rs2.50 a litre to fully cover the under-recovery with diesel price rise expected at Rs2 per litre to offset in part the Rs 4.70 per litre under-recovery.

Deora, meanwhile, is said to hoping to pressure EGoM chairman Pranab Mukherjee to release additional funds to OMCs from the second supplementary budget in the form of the government's share towards making good the under-recoveries that OMCs  accrue for sale of petrol and diesel at prices below the formula prices.