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A day after raising petrol price by a steep Rs 1.80 a litre, Indian Oil Corp, the nation's largest fuel retailer, on Friday said the hike was unavoidable as rupee depreciation has increased crude imports costlier.
"The rupee has dipped from Rs 46.29 to a dollar at the time of the last hike (on September 16) to Rs 49.40 making oil imports costlier," IOC Chairman R S Butola told PTI. India is 79 per cent dependent on imported oil for meeting its fuel needs.
The dip in rupee value against the US dollar necessitated a hike of Rs 2.49 per litre in petrol price, but the desired increase was moderated to Rs 1.52 a litre because of some softening in oil prices. After accounting for local sales tax or VAT, the hike in Delhi came to Rs 1.80 a litre.
"It is not true that we are making profit on petrol. On certain days, may be one or two days, when crude prices had slumped, we must have turned positive. That was a temporary phenomenon.
"We do not do pricing on the basis of daily trends. If that was so the prices of petrol should have been raised by Rs 2.50 a litre because on certain days in October that was the desired increase owing to rupee dipping below 50 to a dollar," Butola said.
IOC and its sister state firms Hindustan Petroleum and Bharat Petroleum take average oil price and the exchange rate for the fortnight for deciding on the desired price at the retail level.
Butola said oil firms were last month losing 22 paisa per litre on petrol which they decided to absorb but from November 1, which took into account the average oil price and foreign exchange rate of second fortnight of October, the quantum had swelled to Rs 1.52 a litre.
"Based on the average oil price in the first fortnight of October, we were losing 22 paise a litre on petrol. Now that the average for the second fortnight of October has come, it shows a loss of Rs 1.52 paise," he said.
The government had decontrolled petrol pricing in June last year and given oil companies freedom to fix rates at retail level.
But they continue to sell diesel, domestic LPG and kerosene at government dictated price. The three firms lose Rs 333 crore (Rs 3.33 billion) per day on selling the three fuel at rates below cost.
The oil ministry in a press statement on Friday said the three firms would end this fiscal with Rs 132,000 crore (Rs 1.32 billion) of loss on the three products.
They currently lose Rs 9.27 per litre on diesel, Rs 26.94 per litre on kerosene sold through the public distribution system (PDS) and Rs 260.50 per 14.2-kg LPG cylinder supplied to households for cooking purposes.