Nagpur: Petrol and diesel prices were on Thursday hiked by Rs 1.50 a litre after government raised excise duty on the two fuel to mop up an additional revenue of about Rs 13,000 crore. The fall in international oil prices had resulted in six consecutive reduction in petrol prices since August and two in diesel in the last one month and there was possibility of another round of cuts this weekend.
However, the possible reduction has now been negated as the the government decided to raise excise duty to shore up its revenue. Excise duty on normal or unbranded petrol was hiked from Rs 1.20 per litre to Rs 2.70 per litre and unbranded diesel from Rs 1.46 a litre to Rs 2.96, a government notification said. The same on branded petrol was raised from Rs 2.35 a litre to Rs 3.85 and on branded diesel from Rs 3.75 to Rs 5.25 per litre.
While the excise duty hike will result in an immediate increase in both petrol and diesel prices, the expected reduction would keep the retail rates at almost the same levels. There is also a possibility of state-owned oil firms preponing the planned review of fuel prices due on Saturday to make the whole exercise price neutral for consumers.
State-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), following the fortnightly review practice, are due to revise rates of petrol and diesel on Saturday. Going by the trend in international market, rates would have been reduced.
Petrol price was last cut by Rs 2.41 a litre on November 1. On the same day, diesel rates were reduced by Rs 2.25 per litre.
Diesel price was cut for the first time in more than five years on October 19 by Rs 3.37 a litre when the government decided to deregulate the fuel. This was followed by another reduction on November 1 .
Prior to the October 19 reduction, diesel rates were previously cut in January 2009. Sources said oil firms revise rates of petrol, which was deregulated in June 2010, and diesel on 1st and 16th of every month based on average international oil price and rupee-US dollar exchange rate.
Brent crude fell to a four-year low of USD 79.86 per barrel amid signs that OPEC remains unwilling to reduce output to ease concern of a global supply glut. Brent has lost almost 30 per cent since its June peak amid speculation that global supply is outpacing demand.