Public sector oil companies raised the petrol price on Wednesday by Rs 6.28 per litre, excluding local taxes, sending shock waves across the country. It is the biggest single hike in fuel prices.
In Delhi, the petrol price was hiked by Rs 7.54 per litre to Rs 73.18 per litre. In Chennai, petrol is up Rs 7.98 and will now cost Rs 77.53 per litre.
Since sales tax or VAT varies from 15 per cent to 33 per cent state to state, an additional Rs 0.94 to Rs 2.07 per litre will be added to the hike of Rs 6.28 per litre.
IOC said the loss it suffered in the current fiscal would require an additional increase of around Rs 1.50 per litre of petrol for the rest of the year.
There is speculation that the government may also take a decision on hiking diesel and LPG prices, and of an EGoM meeting on Friday to discuss hiking the prices of other fuels.
Due to the difference between petrol and diesel prices, there has been a huge increase in diesel car sales.
The government wants to narrow this difference so that people don’t get arbitrage opportunity. Currently, oil companies are losing around Rs 13 per litre of diesel and around Rs 480 on every domestic LPG cylinder.