Retail fuel prices in Delhi fell by another 12 paise per litre for petrol and 14 paise per litre for diesel on Sunday after India’s Oil Marketing Companies (OMC) began offsetting the excise duty hike against the precipitous fall in global crude oil prices. According to sources, the Rs 3 per litre excise duty hike by the Centre on Saturday had been partially adjusted by the OMCs through lower price cuts over the past few days, with the rest to be passed on to consumers gradually by moderating the rate of decline in retail fuel prices in future.
Retail fuel prices have been steadily falling since February 26 this year, from Rs 72.01 per litre of petrol to Rs 69.75 per litre on Sunday and from Rs 64.70 to Rs 62.44 per litre for diesel. While retail fuel prices are set by OMCs based on a 15-day rolling average of international benchmarks, the fall in retail fuel prices have still been much lower than the level of decline in crude oil rates. Brent crude oil rates have fallen sharply and continuously since February 20 to the lowest in several decades, going from $58.50 a barrel to just $33.85 per barrel as of 8.30 pm IST on Sunday.
“So far, retail fuel prices have been reflecting the mild fall and equally mild recovery seen in crude prices during the first half of February. But, the real plunge of over 40 per cent is starting to come into play now. If not for the excise duty hike on Saturday, the decline in retail prices would have been much sharper,” said an industry executive. “Going forward, there will be a more moderate decline in fuel prices as oil companies pass on the rest of the duty hike,” the official added.
On Saturday, the government had hiked excise duty on petrol and diesel by Rs 3 per litre each, in a move that is expected to garner around Rs 39,000 crore in additional revenue. Special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre and from Rs 2 a litre to Rs 4 in the case of diesel. In addition to this, road cess was also raised by a rupee per litre each, bringing the total excise duty on petrol to Rs 22.98 per litre and to Rs 18.83 per litre for diesel. The Centre had previously made a similar move to raise duties on crude oil six years ago, when crude oil prices fell from over $110 per barrel to the $80-level. However, the Centre had decided to raise excise duties on petrol and diesel by Rs 11.77 per litre and Rs 13.47 per litre respectively between November 2014 and January 2016, absorbing a lion’s share of the benefits. The hikes had seen the Centre’s excise duty collections soar to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
12 paise per litre drop in petrol prices
14 paise per litre decline in diesel prices
How OMCs cope with excise duty hike
The Rs 3/litre excise duty hike by the Centre on Saturday had been partially adjusted by the OMCs through lower price cuts over the past few days, with the rest to be passed on to consumers gradually by moderating the rate of decline in retail fuel prices in future