Petrol prices to increase

New Delhi, March 1 (Agencies): Your fuel bill is set to go up shortly, in all likelihood, after Parliament session on April 18. But price of petrol, which is not controlled by the government, could go up sooner than that.
Oil marketers could raise petrol price by ` 2 to ` 4 since they are losing ` 2.25 on each litre. The government could then raise diesel price by  ` 2 a litre and that of cooking gas cylinder by ` 25-50, sending inflation into a spin. The Budget glossed over the impact of high oil prices. It also beat expectations by not paring taxes on crude and motor fuels that would have nixed the need for raising pump prices. Oil minister S Jaipal Reddy had last week said the issue of price increase would be referred to the ministerial panel on fuels.
Crude is at its highest in 30 months, $110/barrel for London Brent and $97 for the benchmark Nymex, and shows no sign of cooling. This has pushed up the expected losses of state-run oil marketers by a quarter to ` 105,000 crore. But the Budget has only ` 23,640 crore in 2011-12 as oil subsidy, lower than ` 38,386 crore for the ongoing fiscal.
The oil marketers had put off raising petrol price for over a month in anticipation of duty tweaks. They are also losing ` 10.74 on a litre of diesel, ` 21.60 on kerosene and ` 356 on a cooking gas cylinder. They have run up losses of ` 46,963 crore between April-December last year. The finance ministry paid ` 21,000 crore cash subsidy and oil producers `15,654 crore discounts to keep them afloat. But the Budget left Customs on crude unchanged at 5% and that on petrol and diesel untouched at 7.5%. Excise duty on petrol will remain at` 14.35 a litre and diesel at ` 4.60 per litre.
According to Akhil Sambhar of E&Y, increase in MAT rates from 18% to 18.5% would negatively impact upstream and refining companies during their tax holiday term. In the run-up to DTC, there is a proposal to introduce a sunset clause for tax holiday on production of mineral oil.