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Petrol at near 5-year high as daily oil price revision restarts after Karnataka polls

May 17, 2018 6:37 pm Category: GALLERY, SLIDER NEWS A+ / A-

petrol hikeNEW DELHI: With the daily price revision of automotive fuels restarting on Monday after a 19-day hiatus
due to Karnataka polls, petrol prices reached nearly five-year high while diesel prices hit a new all-
time high in Delhi.

State-owned oil PSUs hiked petrol prices by 17 paise a litre and that of diesel by 21 paise per liter.

As per the Indian Oil Corp website, petrol price in Mumbai rose to Rs 82.65 a litre on Monday, while diesel
prices reached Rs 70.43. Similarly, in Delhi the petrol price touched Rs 74.80 a litre, while diesel
prices stood at Rs 66.14. In other major cities, petrol prices increased by about 0.2% and diesel
prices rose by 0.3%.

Analysts estimate the three OMCs – Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum
Corp Ltd – took a combined hit of over Rs 1,500-1,700 crore since the start of April, when the prices marginally
higher despite a steep rise in international oil prices. The revisions were altogether stopped
on April 25 due to polls in key southern state.

Industry experts now expect the OMCs to breathe a sigh of relief and try to recover losses by re-
calibrating it with the international prices, although the rise is likely to be gradual. With the US
reimposing sanctions on Iran, global oil prices are unlikely to come down any time soon.

The daily pricing of fuel was enforced by the government in June last year to align with the
international oil prices and currency volatility.

“The OMCs which sustained all the losses due to it, will now certainly try to recover their losses by
increasing the oil prices” said Madan Sabnavis, Chief Economist at CARE Ratings.

As per the industry insiders, India has the history of “regulating” oil prices in the run-up to election
dates. In the past, marketing margins have turned negative in the run-up to state elections in
2015 and 2017, though crude prices then had not risen much as compared to the current surge.

With elections in Karnataka concluding, other states like Mizoram, Chhattisgarh, Madhya Pradesh and
Rajasthan are next in line for state legislative assembly elections before the country gets ready for general
elections in 2019. Hence, the losses to the OMCs are likely to get repeated in the coming months,
affecting their profitability, say analysts.

According to Anoop Bhatia, VP & Sector Head (Corporate Ratings) at rating agency ICRA said “It would
take at least around two weeks of modest price hike by the OMCs for aligning retail fuel prices with
the international level, even if crude oil prices do not increase from the current level. The recent
trend of consistent depreciation in Indian rupee against US dollar, if continued, may further elongate
the period or require sharp hikes to bring retail fuel prices at market-determined level” said Bhatia.

Abhishek Bansal, Chairman, ABans Group, a commodity trading company, said that oil is the most basic commodity
and any gradual effect of rising prices may have adverse effect on many other commodities and
industries.

Petrol at near 5-year high as daily oil price revision restarts after Karnataka polls Reviewed by on . NEW DELHI: With the daily price revision of automotive fuels restarting on Monday after a 19-day hiatus due to Karnataka polls, petrol prices reached nearly fiv NEW DELHI: With the daily price revision of automotive fuels restarting on Monday after a 19-day hiatus due to Karnataka polls, petrol prices reached nearly fiv Rating: 0
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