Can't keep changing fuel prices on knee-jerk basis: Pradhan

Jon Howard
September 14, 2017

While petrol prices have increased by Rs 7.32 to reach Rs 70.38 a litre in Delhi since July, the highest since August 2014, diesel rates have risen by '5.36 to Rs 58.72.

The Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on the weekend on Friday at $53.63 per barrel.

"GST is the only way to have a rational price mechanism for petroleum products. the industry has been demanding it and Finance Minister Arun Jaitley (who heads the GST Council) is very interested to have it", Pradhan said, pointing to the substantial difference in prices between Delhi and Mumbai, for instance, on account of local taxes.

Explaining high fuel prices, Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Wednesday said oil prices in the global market have increased in the last three months due to Hurricanes Irma and Harvey, and assured that it will cool down soon.

Since 2014, the excise duty on petrol and diesel was hiked by Rs 12 and Rs 13.47 per litre, a hike of 226% and 486% respectively over the May 2014 level.

He said dynamic pricing ensures that the benefit of even the smallest change in worldwide oil prices can be passed down the line to the dealers and the end-users.

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He was replying to questions from presspersons on whether the government plans to stall the daily price revision in view of the spike in rates.

Terming the spike as temporary, Pradhan said the drop in prices for over a fortnight after the daily price revision was introduced has been ignored and only "temporary" phenomenon of rising trend is being highlighted.

Daily revision allows any fall in worldwide oil rates to be passed on to consumers immediately rather than having to wait for 15 days as in the old system, he added.

"Should prices be hiked by Rs 2.50 or Rs 3 per litre in one go or they should be spaced out in small doses", he asked.

Though Centre and state both make handsome gains from fuel sales, the continuous rise in pump prices has turned the focus on the Centre raising excise duty on nine occasions between November 2014 and January 2016 to keep part of the savings from falling global crude - and product - prices.

The government is under tremendous political pressure as fuel prices are hovering around three years high in some parts of the country despite global crude oil prices almost half of what they were in 2014. As per latest data, the OPEC basket closed on Friday at $52.53.

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