Petrol prices hiked by Rs 3.14 a litre

State-owned oil companies on Thursday hiked petrol prices by Rs 3.14 per litre as a fall in rupee increased the cost of importing the raw material (crude oil).

Petrol price in Delhi will be hiked by Rs 3.14 a litre in Delhi to Rs 66.84 per litre with effect from midnight, a top official at a state-run fuel retailer said.

Current petrol price of Rs 63.70 per litre corresponds to crude oil price of about $103 per barrel. But crude today is at $110-111 per barrel. This difference coupled with rupee declining to two-year low of 48 to US dollar necessitated an increase in retail price, he said.

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This is the second hike in four months. Oil companies had last hiked petrol price by Rs 5 per litre on May 15.

"We were losing Rs 2.61 per litre or Rs 15 crore (Rs 150 million) per day on sale of petrol. After adding sales tax or VAT, the hike needed to level domestic rates with international prices came to Rs 3.14 per litre in Delhi," another official said.

Petrol prices vary from city to city depending on VAT and other local levies.

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Petrol prices were freed from the government control in June last year but the retail rates have not moved in line with cost as high inflation rate forced the oil companies to seek 'advice' from parent oil ministry before revising rates.

IOC, BPCL and HPCL lost Rs 2,450 crore (Rs 24.50 billion) this fiscal on selling petrol below the cost.

Besides petrol, the three firms are losing Rs 263 crore (Rs 2.63 billion) per day on selling diesel, domestic LPG and kerosene below cost.

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Diesel is being sold at a subsidy of Rs 6.05 a litre, kerosene at Rs 23.25 per litre while domestic LPG rates are under-priced by Rs 267 per 14.2-kg cylinder.

Rupee fell to 48 per dollar on Wednesday for the first time since September 2009. "Every rupee depreciation, the under-recovery (revenue loss) increases annually by around Rs 9,000 crore (Rs 90 billion)," the official said.