Retail costs of auto-fuels are seen to rise once again just after the assembly elections are more than as state-run oil promoting businesses (OMCs) will probably want to enhance their promoting margins amid increasing international crude and solution costs, analysts really feel.
“With the state elections now over, we expect OMCs to resume retail price increase for auto fuel,” analysts at Credit Suisse stated in a current note, adding that “OMCs need to increase retail prices for diesel by Rs 2.8-3/litre and gasoline (petrol) by Rs 5.5/litre to maintain their FY20 margins.
On Friday, retail petrol price in Delhi was Rs 90.40/litre, as rates kept falling since March 24 from the all-time high level of Rs 91.17/litre. From the start of January, petrol price has increased 7.9% to the current level while the cost of Indian basket of crude has grown 24.2% to $64.51/barrel in the same period. The marketing margin of around Rs 3 per litre for diesel in Q4FY21 is the lowest encountered by OMCs in the last nine quarters and despite higher crude prices and cracks, there has been no retail fuel price increase for the past two months.
Legislative assembly elections were scheduled between March 27 and April 29 in Assam, Kerala, Tamil Nadu, Puducherry and West Bengal. “As in past instances, we expect OMCs to recoup the lost margins post elections if crude remains at current levels,” analysts at Jefferies had pointed in mid-April, adding that “inadequate price hikes due to elections could weigh on BPCL’s privatisation”.
The Centre’s tax (fundamental excise, surcharge, agri-infra cess and road/infra cess) is at the moment Rs 31.80/litre for diesel and Rs 32.90/litre for petrol. In March and May, 2020, surcharge and cess on auto fuels had been cumulatively elevated by Rs 13/litre on petrol and Rs 16/litre on diesel.
With the second wave of Covid-19 and new state-distinct lockdowns in April, auto fuel promoting volumes have once again taken a hit. The effect has been worst in Maharashtra whilst Uttar Pradesh, New Delhi, and Chhattisgarh have also been severely impacted.