Are OMCs shifting to alternate day fuel price revision mechanism?

With global crude prices at around $ 69 a barrel mark, OMCs may have revise fuel prices upwards again if there is any further firming up.

New Delhi: Oil marketing companies seem to be moving towards a revised fuel price revision mechanism, shifting to the practice of changing petrol and fuel rates every alternate day rather than undertaking changes on a daily basis.

In the last few days, pump prices of petrol and diesel have been revised every alternate day but the practice had not helped consumers as even under this system prices have only moved up making the fuel dearer.

On Monday, OMCs kept retail price of petrol and diesel unchanged. So petrol still costs Rs 92.58 per litre and diesel Rs 83.22 per litre in Delhi, the same as previous day.

Across the country as well, the petrol and diesel price prices remained static on Monday but its actual retail prices varied depending on the level of local levies in respective states.

The price pause on Monday came after petrol and diesel prices were raised by 24 and 27 paise per litre, respectively, on Sunday. Prior to Sunday, there was no price revision on Saturday. Similarly, while fuel prices were raised on Friday, it remained unchanged in the previous day.

“It seems oil companies are giving a sense of relief to consumers as fuel prices are not being raised on a daily basis. But still prices are not actually falling but being raised on very alternate day too this month,” said an oil sector expert not willing to be named.

He said that the practice of daily price revision, started after deregulation of petrol and diesel prices few years had been done away by OMCs for past several months giving clear indication that administrative price regime is still working for the sector.

Under daily price revision, OMCs revised petrol and diesel prices every morning benchmarking retail fuel prices to a 15-day rolling average of global refined products’ prices and dollar exchange rate. However, in a market where fuel prices need to be increased successively, alternate day price revision seems to be the flavour.

It is worth noting that with 9 price increase in May, the retail price of regular petrol has already reached closer to Rs 99 a litre in Mumbai. Petrol prices are already over Rs 100 per litre in several cities in Madhya Pradesh, Rajasthan and Maharashtra. Premium petrol has been hovering above that level for some time now.

Petrol prices have increased by Rs 2.03 a litre Delhi in May in the nine increases so far. Similarly, diesel prices have risen by Rs 2.49 per litre in capital this month.

IANS had reported earlier that OMCs may begin increasing the retail price of petrol and diesel post state elections as they were incurring losses to the tune of Rs 2-3 per litre by holding the price line despite higher global crude and product prices.

With global crude prices at around $ 69 a barrel mark, OMCs may have revise fuel prices upwards again if there is any further firming up.