The retailers stopped revising prices since February 27, a day after assembly polls in five states were announced. Since then, however, India’s crude cost has risen from $64.7 per barrel on February 26 to $66.8 on Wednesday, hitting $68.4 in between. The rupee too has lost strength during this period to settle at 72.55 against the dollar on Wednesday.
“Oil companies consider a 15-day rolling average for pricing crude. The average is still high for refiners. Benchmark Brent has been ruling high and has shown signs of marginal cooling in the last few days. The Indian basket follows Brent and has softened a bit since Wednesday. But as of now, retailers are losing Rs 4 and Rs 2 on petrol and diesel, respectively. There is under-recovery in LPG also,” a senior official said.
The price of regular petrol shot past Rs 100 a litre for the first time in the country in Sri Ganganagar and some other towns of Rajasthan on February 17. Subsequently, several other cities in states with high VAT too saw the price hit a century. Prices in other states are ruling well above Rs 90 a litre. Household cooking gas has gone up cumulatively by Rs 175 since December.
The rise in fuel prices has prompted widespread clamour for a tax cut by the Centre, which had raised excise duty sharply last year. The opposition parties, especially in poll-bound states, too are using the issue to attack the Centre.
The current freeze on price revision is reminiscent of 2018 when state-run fuel retailers were informally ‘nudged’ by the Centre to hold prices steady for 19 days from April 24 to May 13 ahead of the Karnataka assembly election.
Officially, the government has blamed output cuts by producing countries for high fuel prices and described it as a “temporary” phase. According to ICRA vice-president Prashant Vasisht, the freeze will adversely impact “profitability and cash accruals” of companies, leading to “higher reliance on debt, which might strain their credit metrics”.
