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Oil marketing firms hike prices
June, 07th 2008

The oil marketing companies, Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum, have hiked the prices of premium petrol by Rs 6 per litre and of premium diesel by Rs 3.50-4.25 per litre. Since these premium fuels (high performance petrol and diesel mixed with additives) are outside the purview of price control, the prices are loosely pegged to normal petrol and diesel price. As a result, other than the Rs 5 hike on petrol and Rs 3 hike on diesel allowed by the government, the oil marketing companies have affected an additional hike of Re 1 per litre on the fuels.

As the cost of these fuels is already more than the normal fuel, oil companies suffer less losses on their sale. With the rising consumption of these fuels, the companies are hoping to bring down on their losses. Official data available with The Tribune shows that the sale of these fuels has gone up by 89 per cent in 2007-08. The sale of premium fuels contributed to almost 35 per cent of total sale by the three oil companies in the last fiscal.

The worst hit by this decision will be petroleum dealers in Punjab areas surrounding Haryana. They say the increase in the price of premium fuels will cut down their sales, with these being cheaper in Haryana. With the Haryana government rolling back the value added tax (VAT) on diesel, bringing down the cost of diesel by Re 1 per litre, people will prefer to buy their fuels from the neighbouring state.

Petroleum dealers in Patiala, Sangrur, Mohali, Bathinda and Ferozepur say with normal petrol being Rs 5.40 per litre less expensive in the neighbouring state, they have been seeing a shift of their customer base to Haryana. Earlier, diesel was cheaper in Punjab. But with the rollback in VAT in Haryana, diesel and premium diesel have become cheaper there. Since the diesel sale is almost double the sale of petrol, we will suffer huge losses, said a dealer in Patiala, who expects a 30 per cent loss in business.

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