Petrol and diesel prices went up further on Monday as oil marketing companies raised rates amid firming global crude prices. Oil marketing companies revise petrol and diesel prices every day at 6 am according to the daily price revision process.
On the other hand, diesel retailed at Rs. 64.69 a litre in Delhi, Rs. 67.38 in Kolkata, Rs. 68.89 in Mumbai and Rs. 68.24 in Chennai.
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Besides the global crude prices and rupee-dollar exchange rate, domestic petrol and diesel prices depend on government taxes, both at the central and the state level.
India imports bulk of its energy requirements. Global crude prices have risen to $70 a barrel. An agreement between the Organization of the Petroleum Exporting Countries, Russia and others that started more than a year ago has continued to reduce supply.
The deal is due to expire at the end of 2018, but Saudi Crown Prince Mohammed bin Salman told Reuters that OPEC and Russia were working on an agreement to cooperate for another 10 to 20 years, though that does not specifically mean cuts will continue for that long.
The Oil Ministry had earlier this year sought a reduction in excise duty on petrol and diesel to cushion the impact rising international oil rates.
Finance Minister Arun Jaitley had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs. 2 a litre.
Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT but only a few states reduced rates.
The central government had cut excise duty by Rs. 2 per litre in October 2017, when petrol price reached Rs. 70.88 per litre in Delhi and diesel Rs. 59.14. Because of the reduction in excise duty, diesel prices had on October 4, 2017 come down to Rs. 56.89 per litre and petrol to Rs. 68.38 per litre. However, a global rally in crude prices pushed domestic fuel prices far higher than those levels.
The October 2017 excise duty cut cost the government Rs. 26,000 crore in annual revenue and about Rs. 13,000 crore during the remaining part of the current fiscal year.
State-owned oil companies – Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation – in June last year 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. Since then, prices are revised on a daily basis.