Petrol dearer by Rs 2.50 per litre
Second hike in 30 days; Opposition demands rollback
Sanjeev Sharma
Tribune News Service

New Delhi January 15
In a move that would further roil the public mood in the country already reeling under the burden of runaway inflation, public sector oil companies increased the price of petrol by Rs 2.50-2.54 per litre, the second time in a month following the rise in global crude oil prices.

State-owned oil companies IndianOil, Hindustan Petroleum and Bharat Petroleum increased petrol prices with marginal difference in rates, effective from midnight Saturday, according to sources.

The three companies on December 15 had raised petrol prices by Rs 2.94-2.96 per litre, the biggest hike in six months. This would mean that within a month petrol prices have gone up by almost Rs 5.50 per litre.

The hike put the government and the Congress, already on the defensive due to inflation, into a spot. A bitter Congress leader, asked to react, said, “please ask those (Petroleum Ministry) who are responsible for this untimely hike in petrol prices. They neither consult nor inform the party about such decisions but expect us to rally behind them.”

The Opposition reacted on expected lines. Calling for a rollback, BJP spokesman Prakash Javadekar described the hike as “totally unjustified,” and added, “This is nothing but loot of the common man. A product which costs Rs 30 is being sold for Rs 60, which works out to 100 per cent taxation.”

“The ground of under-recovery of oil companies cited by the petroleum ministry is not true. This is the seventh hike in the last six months,” the BJP leader said. The CPM Politburo described the hike as a cruel blow to the people, which made “a mockery of all government assurances to check price rise.”

Petrol at pumps in Delhi, which now retails close to Rs 55.90 per litre depending on which company it is, will now cost around Rs 58.40 a litre.

The frequent increase in petrol prices follows the government move to free petrol pricing in June, which are now linked with global oil prices. Since all the major oil companies are government-controlled, the decision and timing is still a political call.

The move comes on the heels of world oil prices

touching a two-year high with benchmark prices of Brent crude rising to more than $99 per barrel, the highest level since October 2008 and within kissing distance of the much talked $100 per barrel.

Improved outlook for global demand, economic recovery in the US and severe winter in Europe is causing this spike in oil prices, which will be a huge pressure point for the Indian economy. In a related move that pinch wallets of airline consumers, oil firms also hiked jet fuel prices by 2 per cent, the seventh straight increase in rates since October. Headline inflation numbers released on Friday came in higher at 8.4 per cent and food inflation at a one year high are running much above the comfort level of policy makers and are leading to public outrage as items of daily use spiral beyond control.

The government still controls prices of diesel and cooking gas and had put off a decision last month to increase diesel prices since it is considered more inflationary. Diesel is used for transport of many commodities and items and also for public transport and agriculture, which contributes more to inflation. Cooking gas is also a political hot potato and is not easily touched.

With global crude prices rising, PSU oil companies have been suffering losses on the sale of petrol and diesel and the government’s subsidy burden is also going up. Oil companies said they are losing more than Rs 6 per litre on diesel sales.

Meanwhile, petrol would be dearer by Rs.2.61 per litre in Dehradun of Indian Oil corporation outlets, according to administrative officials.

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http://news.oneindia.in/2011/01/16/petrol-price-hike-rs-250-crude-aid0101.html