State-run oil marketing companies have been asked not to increase retail petrol and diesel prices by absorbing a part of the losses due to the recent rise in global crude oil prices, news agency Bloomberg reported, citing sources with knowledge of the matter.
Shares of oil marketing companies slumped following reports that the government is asking these firms to absorb price hikes. Both Hindustan Petroleum Corporation and Bharat Petroleum Corporation plunged over 7 per cent, while Indian Oil dropped over 6 per cent.
Global crude oil prices have been on an upward trend, rising over $70 a barrel, the highest level since 2014. India imports about 80 per cent of its annual crude oil requirement.
Rising global crude prices have sent domestic petrol and diesel prices to multi-year highs. Petrol was retailing at Rs. 73.98 a litre in Delhi, according to Indian Oil website, while diesel was being sold at Rs. 64.96 per litre.
High fuel prices have led to calls for an excise duty cut by the government. But the government had earlier ruled out any immediate reduction in excise duty to cushion rise in international oil prices that have sent retail diesel rates in India to record high and petrol to four-year high.
The central government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions. The government had cut excise duty by Rs. 2 per litre in October 2017.
State-owned oil companies - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - had in June last year dumped the 15-year old practice of revising rates on the 1st and 16th of every month . Instead, they adopted a daily price revision system to instantly reflect changes in cost. Since then, prices are revised on a daily basis.