Petrol and diesel prices were hiked again on Sunday to send rates soaring to new record highs across the country but top government officials insisted oil companies haven't passed on the entire increase warranted from international oil and gas rising to three-year highs and have ensured a UK-like situation of pumps going dry isn't seen anywhere in India.
Petrol price for the third straight day hiked by 25 paise a litre and diesel by 30 paise, according to a price notification of state-owned fuel retailers. This sent the petrol price in Delhi to its highest ever level of Rs 102.39 a litre and to Rs 108.43 in Mumbai. Diesel rates too touched a record high of Rs 90.77 in Delhi and Rs 98.48 in Mumbai.
Prices differ from state to state depending on the incidence of local taxes. Petroleum Secretary Tarun Kapoor said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided.
"We are watching the situation and trying to ensure the impact of global volatility is moderated to a large extent," he said.
The basket of crude oil India buys has jumped to a near three-year high of USD 76.71 per barrel. International prices of petrol, against which local rates are benchmarked, have risen from USD 85.10 per barrel to USD 87.11 in just one day while diesel has gone up from USD 85.95 a barrel to USD 87.27.
This sudden spike in international oil prices follows global output disruptions but the entire increase in retail rates necessitated by such an increase is not being affected, another official with direct knowledge of the matter said.
"Just look at LPG rates. They have gone up from USD 665 to USD 797 in one month but oil companies haven't passed on the increase warranted from that," he said adding state-owned companies were absorbing a lot of volatility. The increases, he said, have been "mild to moderate".
"Some people are making a big deal out of the 62 per cent hike in natural gas prices. But if you look at the rates previously at USD 1.79 per million British thermal units were abnormally low and way below cost. They have now gone up to USD 2.9. They still are less than the cost of production of USD 3.5 per mmBtu and are certainly lower than the USD 4.2 price that was prevalent in India a decade back," the official said.
Naturally, the hike in natural gas price will warrant an increase in CNG price but the increase is again being moderated there too, he said adding internationally the price of LNG in the spot market last week soared to an unprecedented USD 35.
"Compare to what is happening worldwide, we have managed the situation well," the official said. "Some of the developed nations such as the UK have seen petrol pumps go dry but you won't have heard of such a situation anywhere in India. Our oil companies are not just moderating retail prices but also ensuring uninterrupted supplies."
Officials said India believes the situation internationally is temporary and abnormal and things should stabilise over the next few days and weeks.
The fifth increase in its rates in less than a week's time has sent petrol prices above Rs 100 in most major cities of the country.
Similarly, the eighth increase in prices in 10 days has shot up diesel rates above Rs 100 mark in several cities in Madhya Pradesh, Rajasthan, Odisha, Andhra Pradesh and Telangana.
State-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) resumed daily price revisions on September 24 after international oil prices neared a three-year high. Global benchmark Brent crude is trading above USD 78 per barrel.
In eight price increases since September 24, diesel rates have gone up by 2.15 paise per litre. Petrol price has increased by Rs 1.25 per litre in five instalments this week.
When international oil rates fell in July and August, retail prices of petrol and diesel in the Delhi market were reduced by Rs 0.65 and Rs 1.25 per litre.
Prior to that, the petrol price was increased by Rs 11.44 a litre between May 4 and July 17. Diesel rate had gone up by Rs 9.14 during this period.
India is dependent on imports to meet nearly 85 per cent of its oil needs and so benchmarks local fuel rates to international oil prices.