September 2, 2013: September has begun on a pricey note for motorists in India as the oil marketing companies (OMCs) raised the retail selling prices of petrol by Rs 2.35 per litre (excluding state levies) and that of diesel by 50 paise a litre from the midnight of August 31/September 1. Petrol prices were last revised upwards on August 1, by 70 paise a litre. The bad news is that more price hikes could be coming soon, thanks to the sharp decline in the value of the rupee to the US dollar.

According to IndianOil Corporation, after the last price hike, the exchange rate has deteriorated sharply from Rs 59.49 to a dollar to Rs 63.88 during the current pricing cycle. The statement from the company says, “Currently, the INR-USD exchange rate continues to be extremely volatile. Also geopolitical situation in the Middle-East is leading to pressure on international oil prices as well. In view of these conditions, movement of prices in international oil markets and INR-USD exchange rate is being closely monitored and subsequent price changes will reflect developing trends of the market.”

It is understood that petroleum minister M Veerappa Moily has written to prime minister Manmohan Singh and finance minister P Chidambaram, highlighting the revenue loss (around Rs 181,000 crore in 2013-14) the OMCs are expected to incur. This figure is around 13 percent more than the Rs 161,000 crore under-recoveries during the last fiscal year (2012-13).

The government is likely to wait for the current Parliament session to end next week, before it gives the nod to OMCs to further hike fuel prices.