Mumbai: The government has asked state-run oil marketing companies not to increase retail prices of petrol and diesel and to absorb a part of losses due to spurt in global crude oil prices, reports said.
Shares of oil marketing companies plummeted following reports that the government is asking these firms to absorb price hikes. Both Hindustan Petroleum Corporation and Bharat Petroleum Corporation plunged almost 8 per cent, while Indian Oil dropped over 6 per cent.
Global crude oil prices have been on an upward trend, rising over USD 70 a barrel, the highest level since 2014. India imports about 80 per cent of its annual crude oil requirement.
Rising global crude prices have sent domestic petrol and diesel prices to multi-year highs. Petrol was retailing at Rs 73.98 a litre in Delhi and Rs 81.83 a litre in Mumbai, according to Indian Oil website, while diesel was being sold at Rs 64.96 per litre in the national capital while it fetched 69.17 a litre in Mumbai.
Rising fuel prices have led to calls for an excise duty cut by the government. However, the government earlier had ruled out any immediate reduction in excise duty to cushion rise in international oil prices that have sent retail diesel rates in India to record high and petrol to four-year high.
Excise duty on petrol and diesel has been increased on nine occasions between November 2014 and January 2016 by the Central government. The government had cut excise duty by Rs 2 per litre in October 2017.
State-owned oil companies - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - had in June, 2017 dumped the 15-year old practice of revising rates on the 1st and 16th of every month. Instead, they adopted a daily price revision system to instantly reflect changes in cost and since then, prices are revised on a daily basis.
Besides global crude prices, government taxes - both at the Central and state level- and marketing margins determine the final retail price.
(With inputs from agencies)...