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Day after BS-VI roll-out, oil PSUs confirm no price hike for now

A day after OMCs fully transitioned to BS-VI compliant fuel, the three oil companies have confirmed there will be no hike in price
New Delhi: A day after state-run OMCs (Oil Marketing Companies) — IndianOil, BPCL and HPCL — fully transitioned to BS-VI compliant petrol and diesel across the country, the three oil companies have confirmed there will be no hike in price. “Considering the current crisis brought on by the COVID-19 pandemic, the OMCs have kept the prices of petrol and diesel unchanged with effect from 1st April 2020, which were otherwise also being maintained steady,” an official statement released by IndianOil said on Thursday.

‘Price hike in some states due to VAT, not BS-VI rollout’

The statement said that the hike in price of petrol and diesel in some states was due to a hike in VAT rates by states. “However, the increase in the RSPs of petrol and diesel in some states like Maharashtra, Karnataka, West Bengal, etc., with effect from April 1 is purely on account of the increase in VAT rates by the respective State Governments on both the products from that date. The OMCs have made no change in the basic selling price and have maintained it at the same level,” the statement said.

Some impact on BS-VI price could be visible later: OMCs

The PSU OMCs have incurred capital expenditure to the tune of about Rs 35,000 crore in upgrading their countrywide refineries, pipelines and marketing distribution network to be able to usher in BS-VI fuels, directly leapfrogging from BS-IV fuels. Further, the refineries shall incur incremental operating costs on a sustained basis to manufacture BS-VI petrol and diesel with 10 parts per million (ppm) of Sulphur as against 50 ppm in BS-IV fuels earlier. Taking into consideration the CAPEX costs and the likely incremental OPEX costs, there would be some impact on the retail selling price of petrol and diesel.  
RSPs of Petrol (Rs./litre) Delhi Kolkata Mumbai Chennai
Previous (31.3.2020) 69.59 72.29 75.30 72.28
Revised  (1.4.2020) 69.59 73.30 76.31 72.28
Increase/(decrease) 0.00  1.01 1.01 0.00
RSPs of Diesel (Rs./litre) Delhi Kolkata Mumbai Chennai
Previous (31.3.2020) 62.29 64.62 65.21 65.71
Revised  (1.4.2020) 62.29 65.62 66.21 65.71
Increase/(decrease) .     0.00 1.00 1.00 0.00
  “In view of the extremely volatile situation, the OMCs are keeping a close watch on global cues and the market scenario while taking pricing decisions,” the statement read.

The backdrop

The news comes as global crude oil prices soared on Thursday after US President Donald Trump announced that he expected Saudi Arabia and Russia to announce a major cut in oil production. The Saudi state media has also reported that the kingdom was calling an emergency meeting of oil producers at which issues pertaining to market turmoil will be addressed. This pushed up oil prices by as much as 25 percent of $6.28 to $31.02 a barrel.