Petrol price cut by Rs 2 per litre, excluding VAT

The cut in petrol price follows two rounds of hike in rates since February

Petrol price was on Friday cut by Rs 2 per litre with effect from midnight tonight, the steepest reduction in rates in nine months. While petrol price has been cut by Rs 2 per litre, excluding local sales tax or VAT, there will be no change in diesel rates.

After including VAT, the reduction in price of petrol in Delhi comes to Rs 2.40 per litre and the fuel will from midnight tonight cost Rs 68.34 per litre as against Rs 70.74 currently. It was expected that oil firms will also effect the monthly hike of 40-50 paise per litre in diesel rates but they deferred the decision apparently to save the government from trouble in Parliament.

When oil firms had last hiked petrol price on 2 March, opposition parties had disrupted one full day’s proceedings. The cut in petrol price follows two rounds of hike in rates since February. Petrol price was hiked by Rs 1.50 a litre on 16 Feb and then by Rs 1.40 per litre from 2 March. Both were excluding VAT.

The reduction in rates was possible as international oil prices have eased. While the slide in international prices of crude oil from $112.73 per barrel to $107.41 enabled reduction in petrol prices, it also helped lower losses on diesel sales. Losses on diesel have come down to Rs 8.64 per litre from Rs 11.26 at the beginning of the month, according to Indian Oil Corp (IOC) which announced the price revision. Oil firms calculate the desired retail price on 1st and 16th of every month based on average imported oil price on the previous fortnight. Petrol price had last been cut by over Rs 2 per litre in June 2012 when prices were reduced from Rs 70.24 to Rs 67.78 per litre. IOC said rupee had depreciated marginally. ‘Following this trend, it has been decided to pass on the benefit to customers,’ the company said.

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Bharti Airtel raises the call tariffs

Bharti Airtel Ltd, world’s top mobile phone carrier has announced that it is going to raise voice call prices. India’s top carrier in mobile communication said that it is raising prices of all call tariffs to account for rising costs, sending shares of telecommunication companies higher as investors bet that rivals will follow the market leader.

Idea Cellular Ltd, India’s No.3 carrier by revenue and No.4 by customers has also said that from Wednesday it had effectively raised voice call prices in some parts of the country after withdrawing promotional offers. Idea did not reveal the details of those locations.

The raise in the price of call tariffs was initiated by the phone carriers in India since they have to face billions of dollars in airwave surcharges after the government overhauled its system of spectrum sales in response to a massive scandal in 2011 over an alleged below-market price sale of permits and airwaves three years before.

The government will be selling the airwaves through open bidding in an auction. Next bidding would take place in March with the minimum bid price at both auctions more than six times the previous fees set by the government. A sector analyst of Nirmal Bang Equities, Harit Shah said that part of the tariff hike is driven by cost pressures and also it is sort of a pre-emptive move in order to improve financials because they are going to have a major auction ahead. Shah said that raise of call tariffs would be moderate and add extra pressure on call volumes. He added that India is a price-sensitive market and hence there may not be any impact on usage.

Of course, the carrier might not stick with new prices. It has reported a loss of market share with an increase in call tariff in 2011. Bharti Airtel said that it did not increase headline tariffs but reduced promotional benefits and free minutes offered to customers. It added that price change was in line with the increase in its costs. As per reports from genuine sources, Bharti Airtel is reducing free minutes by up to a quarter and has increased prices of some call vouchers for prepaid customers by Rs. 5 – 15 ( 10 to 30 cents).

Align Domestic Fuel Prices with Global Rates: President

Close on the heels of steep increase in diesel price and cap on supply of subsidised LPG, President Pranab Mukherjee said greater alignment of domestic rates with global prices was in the interest of both consumers and investors.

A steep 5.62 per litre hike notwithstanding, diesel continues to be sold at a discount of 11.05 per litre to its actual cost as international rates continue to rule high.

“In the present international environment of rising petroleum prices, greater alignment of prices to global prices is in the interest of both consumers as well as investors,” Mukherjee said inaugurating the 10th edition of Petrotech Oil & Gas Conference.

“Government of India is committed to adopt a time-bound programme to achieve this,” he said.

The government had in June 2010 freed petrol price from its control and agreed to free diesel rates in a calibrated manner.

“Just like financial markets, the world energy markets are inherently global and interdependent, and no single country can isolate itself from the market,” the President said in an apparent reference to India’s dependence on world markets to meet its energy needs.

India’s oil import bill, he said, has crossed $150 billion as it imports 75 percent of its needs.

“For a GDP growth of over 8 percent during India’s 12th (Five Year) Plan, it would be imperative for us to ensure better demand management in our country,” he said. “There must be increased understanding of the fact that the path to a more sustainable future will require our society to make a better balance between its energy consumption visa visits cost and availability.

Source: PTI