Petrol price cut by Rs. 2.46 a litre

Prateek Pathak : Managing Editor : Allahabad Post




The three oil marketing companies on Thursday cut petrol prices by Rs. 2.46 a litre. The second reduction this month came into effect on Thursday midnight.

In Delhi, petrol will cost Rs. 67.78, against Rs. 70.24. The price will be Rs. 73.35 in Mumbai, Rs. 72.24 in Kolkata and Rs. 72.27 in Chennai. Hyderabad and Bangalore will see the maximum reduction of Rs. 3.22.
Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) announced the cut simultaneously. On May 23, these firms undertook the sharpest increase in the last decade, jacking the price up by Rs. 7.54 a litre. However, on June 3, they announced a reduction of Rs. 2.02.
An IOC statement said the reduction would vary from Rs. 2.46 to Rs. 3.22 a litre, depending upon the State taxes. In Delhi, the decrease would come to Rs. 2.46. In other States, it would depend upon the rates of value-added and sales taxes.
The companies, which usually revise the rates on the 1st and 16th of every month on the basis of the average import cost and forex rates of the previous fortnight, skipped changing the prices on June 16. Gasoline rates have since fallen to $97 a barrel. But the rupee has depreciated to 57 against the dollar from 54.96 (the average of the first fortnight of June).
The statement said the IOC had already accumulated Rs.1,053 crore in losses on petrol sales during the first two months because of its inability to revise the prices to reflect the high international oil prices and the depreciation of the rupee.
The IOC pointed out that the companies were suffering heavy looses: the current under-recovery on diesel had gone up from Rs. 6.13 to Rs.10.20 a litre; on kerosene from Rs.24.16 to Rs. 30.53 a litre; and on the domestic LPG from Rs. 331.13 to Rs.396.00 a cylinder. The under-recovery on the sale of sensitive products during 2012-13 was estimated at Rs. 83,000 crore.


When petrol prices touched a new high recently, Srinivasan was unperturbed like many of his colleagues. For someone driving an electric bike for six years, price rice made no difference to his monthly budget. For those looking to combine an economical mode of transport with environment-friendly travel, electric bikes or e-bikes as they're popularly known, are an alternative.
Electric bikes are similar to scooters but run on electricity. The popularity has seen an upswing, vouch dealers. Despite awareness being low, enquiries and orders have increased. According to Rajavel, a dealer of a showroom selling branded electric bikes in Thillai Nagar, they are an ideal way to economise. “Even after spending Rs. 80 on petrol, you get a mileage of 50 to 60 kilometres. By charging the battery for six hours you can get the same mileage. And you spend less than Rs. 5 as it consumes one to one and a half units of electricity only.” These vehicles range between Rs. 32,000 to Rs. 45,000.
E-bikes are the best bet for underage drivers as most models notch up 25 to 30 km speed and do not require registration or a driving licence, points out Mohamed Hasin, a college student. “I was 16 when I got e-bike and it was a better option than procuring a driver's license. The e-bike is ideal for high school students looking for their first vehicle too. They can use it for two to four years in a row without much hassle.” Though Hasin switched to a petrol version when he joined college, he admits, “It was easier to plug in the bike, charge it and go. With spiralling petrol prices, I am thinking of walking instead of using my bike!”
Safety and environmental consciousness are the chief reasons why second year college student Sahanaa has stuck on with her e-bike for four years. “I bought the bike in the middle of class XI when I had to make it around to tuitions before and after school. Being a time of petrol hikes, my family was looking for something energy efficient and safe.” That e-bikes are not petrol guzzlers has her recommending them to friends.
The prominent chink in the armour is the battery life, feels Hasin. The battery used to slow down nearing 40 km and there is a danger of it draining up completely. Unlike petrol bikes, you cannot rush to the nearest pump or you'll have to carry your charger around.” Yet, despite power cuts, the vehicle can be left to charge overnight.
Public perception of e-bikes is skewed, notes Mr. Rajavel. “E-bikes picked up five years ago when they were introduced in the market, but most of them were fitted with cheap China batteries . With no long-term service support, these bikes became unusable. Many still bring them to us, asking if we could repair them. However the scenario is different today with branded e-bikes in the market.”
Speed is the main deterrent, explains Rajavel. Though models that require driving licence can go up to 45 kms, people desiring a higher speed to drive on the outskirts, stay away from e-bikes. “Most of our clients are school students, ladies and senior citizens. It is apt for driving within the city where the speed limit is 30 km.”

Dismissing the “false impression” that they are hiking petrol prices despite having recorded huge profits, the heads of three public sector oil firms have pointed out that without a combined bailout package of Rs. 1,38,500 crore, they would have posted whopping losses in the last financial year.
In a joint statement, the chairmen and managing directors of Indian Oil, Hindustan Petroleum and Bharat Petroleum said that while they had declared nominal profits of Rs. 6,177 crore, this was only because of help from the government and the upstream oil companies ONGC, OIL and GAIL. Without the bailout package – granted so that the firms could maintain their blue chip status and global credit ratings – the trio would have been in the red to the tune of Rs. 1,32,000 crore.
The three oil firms have been under fire ever since last month's steep hike of Rs. 7.50 in petrol prices. Despite a partial rollback, politicians across the spectrum – including two Cabinet Ministers — have condemned the hike, questioning the profits posted by the oil firms.
In their statement, the CMDs insisted that the highly subsidised sale of diesel, domestic LPG and PDS kerosene has put their firms under “huge financial strain.”
With rapidly rising borrowings and a doubled interest burden, the firms “would not have been in a position to raise necessary finance to purchase crude from the international market and maintain uninterrupted supply of petroleum products in the country” without government help, they said.
The statement also dismissed the “propaganda” that the firms were incurring huge administrative expenses by pointing out that 91 to 93 per cent of their entire costs actually go towards crude oil and products bought from outside. With average crude prices rising 32 per cent from the previous year, and the rupee depreciating sharply, the petrol price hike was “absolutely unavoidable,” said the statement.
Bailout package only to maintain their blue chip status
“Highly subsidised sale of diesel, domestic LPG and PDS kerosene put our firms under huge financial strain”


Communist Party of India national secretary D. Raja today termed the reduction in petrol prices as “totally inadequate” and said the oil companies should go for a “complete rollback” because they had effected “such an outrageously steep hike when international crude prices were declining”.
He said the decision came two days after nation-wide protests by Left and other parties.
BJP spokesperson Rajiv Pratap Rudy pressed for a “total rollback” and wondered whether the hike of Rs. 6 per litre after the partial rollback was “acceptable” for UPA allies.
“I want to know whether they (UPA allies) are worth this,” Mr. Rudy asked.
He said people of the country are not satisfied with the token rollback and will teach UPA a “lesson in the coming days”.
CPI(M) Polit Bureau said the partial rollback was “unacceptable” and Left parties will continue their agitation for reversal of the price increase.




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