Retail prices of diesel in Delhi rose to all-time high of Rs 75.79/litre on Wednesday with rates of auto fuels being raised for the 11th day in a row by state-run oil-marketing companies (OMCs) in a bid to revive their marketing margins.
The previous high of retail diesel price in Delhi was Rs 75.69/litre recorded on October 16, 2018, even though current rate of $38.4/barrel for Indian basket of crude is less than half of October 2018 levels.
Petrol, on Wednesday, cost Rs 77.28/litre in the national capital, still lower than its highest of Rs 84/litre on October 4, 2018.
Auto fuel rates have been rising continuously since June 6, when diesel and petrol were priced Rs 69.39/litre and Rs 71.26/litre, respectively.
Analysts said that prices will likely rise further if they want to maintain their marketing margins to Q4FY20 levels. “Further with crude discount (discount of $6/barrel available in June), turning to premium from next month, OMCs will have to further take a price hike of Rs 3.5-4/litre just to pass on the $6/barrel increase in crude price,” Credit Suisse said. If crude rates cross $40/barrel, retail prices will have to be raised further.
Union and state government taxes comprise the highest proportion of retail petrol-diesel rates. Of the Rs 75.79/litre on diesel, excise duty is Rs 31.83/litre and Rs 17.60/litre is state VAT. The base price of diesel charged by OMCs had increased to `22.93 on June 16 from Rs 18.49 on June 1. ICICI Securities had pointed that net marketing margin of OMCs had slipped into the red at minus `1.28/litre on June 6, and has surged to Rs 3.1/litre on Monday due to retail price hikes.
The marketing margins of the OMCs had taken a hit after prices remained unchanged for about a month to accommodate the sharp Rs 10-13/litre rise in central government’s auto fuel taxes in early May. Diesel prices are high also because the Delhi government, taking a cue from the Centre, had also increased the value added tax on diesel to 30% from the previous rate of 16.8%.