No respite for vehicle owners: Petrol, diesel prices at 3-year high

Oil Minister Dharmendra Pradhan

Oil Minister Dharmendra Pradhan

The government, for now, has ruled out any change to the current pricing policy arguing that it, in fact, ensures that the benefit of lower global crude oil prices is passed on to domestic consumers.

"The daily price mechanism is transparent and will help consumer in long term", he said.

Minister of Petroleum & Natural Gas Dharmendra Pradhan today said the Government will adopt immediate measures to check the price of petroleum products. Traditionally, fuel prices were determined on a cost-plus basis, which led domestic prices to fall in line with the cost of inputs like crude oil.

Meanwhile, under the daily revision of fuel prices, petrol in Mumbai on Monday cost Rs 79.41 a litre, breaching the level it last touched in August 2014.

"GST is the only way to have a rational price mechanism for petroleum products. the industry has been demanding it and Finance Minister Arun Jaitley (who heads the GST Council) is very interested to have it", Pradhan said, pointing to the substantial difference in prices between Delhi and Mumbai, for instance, on account of local taxes.

The petrol and diesel prices have gone through the roof ever since the central government announced daily revision of fuel prices.

With crude oil prices plunging past year, the government levied cess on petrol in order to mop up extra revenue for the exchequer. Albeit, of late, the rise in the retail fuel prices was seen due the impact of hurricanes Harvey and Irma on the global fuel markets, Dharmendra Pradhan said, adding that the situation is likely to ease out in the coming days.

He further apprised that there is no plan to review the excise on petrol and diesel. Similarly, the price of diesel is at a three-year high in the metro cities of Kolkata and Chennai at Rs 61.37 and 61.84 per litre respectively.

Though global crude and product prices have been rising for some time, the recent spike has been stoked mainly by fears of product shortage in the wake of hurricanes Harvey and Irma knocking out 13% of USA refining capacity.

Tax on petrol and diesel makes up for around 50 per cent of the total fuel prices.

Going further, Dharmendra Pradhan also said that with more and more private sector players coming into the fuel retailing business, the sector will see more efficiencies from increased competition, leading to lower prices for the consumers.

The excise duty hike resulted in the government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

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