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Fuel prices need to rise by ₹8 to ₹10 to offset the recent crude oil hike, sources said.
According to NDTV sources, fuel prices are likely to increase by Rs 8 to Rs 10 to offset the significant jump in crude oil since the last revision, but it depends on several factors.
In metro cities, fuel prices remained unchanged as on Thursday, March 3, 2022. This is the most extended period that rates have remained stable since the daily revision of prices began in June 2017.
But energy prices have bounced during the period, driven by supply concerns from the Russia-Ukraine conflict, with crude oil within a whisker of $120 on Thursday before pulling back to around $114.
Crude oil prices have increased significantly by about 25 percent during that period.
According to NDTV sources, the required price revision in retail price of petrol and diesel is expected to be around ₹8 to ₹10 per liter to offset the rise in crude oil prices in this period.
If the government approves the release of crude oil from its reserve stock, the amount of required increase in retail fuel prices will be reduced. The other option, of course, is to reduce excise duty and value added tax. Therefore, the exact quantum of increase required in the retail price of petrol and diesel will depend on several variables, he said.
The central government had cut excise duty on 4 November 2021 to provide relief from prices that have reached an all-time high. The government had cut the duty on petrol by Rs 5 per liter and on diesel by Rs 10 per liter, which brought down the fuel prices significantly.
Later in December 2021, the Delhi government reduced the value-added tax on petrol from 30 per cent to 19.40 per cent. With this, petrol prices in the national capital were reduced by Rs 8.56 per litre.
Considering the recent increase in crude oil prices, Indian oil companies may soon take a decision on increasing the prices of petrol and diesel.
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