Govt announces record-high increase in fuel price
In an abrupt late night notification, the government increased per litre petrol price by Rs25.58 to Rs100.10 with immediate effect.
The price hike was notified immediately and would remain effective till July 31.
The sudden notification was against the conventions as in normal practice, the price hikes are proposed by the government in the first phase after which they are reviewed by the Oil and Gas Regulatory Authority (Ogra) and then notified by the government on the last day of month.
This time around, however, the government skipped all these steps and immediately notified the price without seeking an opinion from Ogra.
The authorities said the immediate notification was necessary as any premature announcement would have dried out the fuel stocks from petrol pumps across the country as consumers would have rushed to buy fuel at cheap prices.
The per litre price of diesel was also increased by Rs21.31 to Rs101.46, whereas the price of light diesel oil was increased by Rs17.84 per litre Rs55.98.
In addition, Kerosene oil prices were also increased by Rs23.50 to Rs59.06 per litre.
The break-up of petrol price shows that of the new per litre price of Rs100.11, government taxes account for Rs45.55, freight and retail costs Rs9.70 whereas the base price — PSO’s supply cost — is at Rs45.86.
That means that almost half of the per litre petrol price is due to taxes.
The government is facing a management crisis in the oil sector. The steep fall in oil prices and shrinking consumer demand in the wake of Covid-19 caused huge losses to the refineries and oil marketing companies as they had to sell oil — bought at high rates — to consumers at low prices after the government announced sharp cuts to the oil prices last month.
The sudden price cuts led to an acute fuel shortage across the country especially in the northern region some pumps either refused to sell petrol or diesel at notified prices or shut down the petrol pumps entirely.
The new prices, announced yesterday, will be a relief for the oil sector.