Karnataka polling over; petrol, diesel prices hiked after 19-day hiatus

After a 19-day pre-Karnataka poll hiatus, petrol price was on Monday hiked by 17 paise a litre and diesel by 21 paise as PSU oil firms began passing on the spike witnessed in international rates to consumers.

Petrol price in Delhi was hiked to ₹74.80 per litre from ₹74.63 while diesel rates were increased to ₹66.14 a litre from ₹65.93, according to a price notification issued by state-owned oil marketing companies. With this, diesel prices have touched a record high while petrol is at a 56-month peak.

Oil PSUs, who had kept rates unchanged since April 24 until Karnataka went to polls despite input cost spiking, reverted to daily revision in prices no sooner had the state voted to elect a new government on Saturday.

Citizens took to Twitter to comment about government’s decision to hike prices immediately after Karnataka elections were over.

State-owned oil marketing companies are estimated to have lost about ₹500 crore as they absorbed higher cost resulting from the spike in international oil rates and fall in rupee against the US dollar.

Oil PSUs have refused to acknowledge if the freeze followed a government diktat so as to help ruling BJP in Karnataka. Indian Oil Corp (IOC) Chairman Sanjiv Singh last week said that the state-owned firms were "temporarily moderating" prices to avoid sharp spikes and panic among consumers.

Petrol and diesel prices were last revised on April 24 when they were hiked by 13 paise each. But prices were frozen thereafter. This despite benchmark international rate for petrol going up from $78.84 per barrel, which was used for raising the price to ₹74.63 a litre on April 24, to $82.98 now, according to sources privy to fuel pricing methodology.

The benchmark international diesel rates during this period have climbed from $84.68 per barrel to $88.63. Also, the rupee has weakened to ₹67 per US dollar from ₹66.62, making imports costlier.

Oil Minister Dharmendra Pradhan had last month denied reports of a directive to state oil firms to absorb at least ₹1 a litre hike by not raising prices in line with cost.

In the run up to Gujarat polls, the prices of fuel at petrol pumps of state-owned fuel retailers like Indian Oil Corp (IOC) were cut by 1-3 paise every day in the first fortnight of December 2017.

They were raised immediately after polling for assembly elections in Gujarat concluded on December 14, leading to speculation that government may have asked oil companies to hold the prices.