After poll results, petrol prices rise Rs 5 a litre

NEW DELHI: Oil companies have raised petrol prices by Rs 5 per litre from Sunday, the biggest rise in two and a half years, as international crude prices have soared and the government gave state-firms the go-ahead after assembly elections were completed.

State-run firms such as Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp are technically free to raise prices, but they had held back the decision after informal instructions from the government, which did not want to annoy voters in West Bengal, Tamil Nadu, Assam and Kerala.

A day after the election results were declared, oil firms were allowed to raise prices, but not to the extent needed to completely align Indian rates with international levels. ET first reported on May 5 that petrol prices would be raised by Rs 5. “The requirement is Rs 10.50 but we have not gone for a full increase to protect customers,” IOC chairman RS Butola told ET.

Oil industry executives said they were closely monitoring international prices and another petrol price increase cannot be ruled out. One director in IOC said the company’s borrowings had increased by Rs 15,000 crore in the past 45 days as prices were frozen. “It is a welcome move but there is definitely room for more. This would lead to a 50% reduction in our losses,” BPCL director for finance SK Joshi told ET.

Oil companies are also waiting for the meeting of the panel of ministers, which will review the state-set prices of diesel, which have not been raised since June 2010.