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Premium fuel comes at a ‘premium’
Ruchika M Khanna
Tribune News Service

Chandigarh, July 2
The oil-marketing companies, Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum, have hiked the prices of premium petrol by Rs 5 per litre and that of premium diesel by Rs 2.75 to 3 per litre.

These premium fuels (high-performance petrol and diesel mixed with additives) are outside the purview of price control and their prices are loosely pegged to the price of crude oil in the international market. As a result, other than the Rs 4 per litre hike on petrol and Rs 3 per litre hike on diesel allowed by the government yesterday, the oil-marketing companies have effected additional hike of Rs 1 to 1.50 (subject to local taxes) per litre on premium petrol and Re 1 to 1.50 per litre on premium diesel.

Since the prices of these fuels are already more than the prices of normal fuel, oil-marketing companies do not suffer losses on their sale. With the rising consumption of these fuels, the companies are hoping to bring down their losses.

Official data available with The Tribune shows that the sale of these fuels went up by 89 per cent in 2007-08, though these slumped again last year. In the last fiscal, sale of premium petrol went down by 5 per cent, while the decline was 13 per cent in case of branded diesel.

Besides general slowdown in demand, sales had fallen due to higher excise duty, which increased the price gap between branded and unbranded fuels, sources said.

In June, 2008, the government reduced excise duty on non-branded diesel and petrol by Re 1 a litre, while leaving it unchanged for branded products. Branded petrol and diesel were the first products on which oil companies started registering profits once crude oil prices were back in the double-digit zone after touching a peak of $147 a barrel in July last.

Now, in order to jack up the sales of these premium fuels, the oil-marketing companies have devised a mechanism of maintaining a price differential of Rs 2 per litre between normal petrol and premium petrol and Rs 1.75 per litre between normal diesel and premium diesel.

Petroleum dealers in Punjab areas surrounding Haryana would be the worst hit due to the decision. The increase in prices of premium fuels would cut down their sales as these were available at lesser prices in Haryana, they said.

With normal petrol being Rs 4.50 per litre less expensive in the neighbouring state, people preferred to get their vehicle refuelled in border areas of Haryana, petroleum dealers in Patiala, Sangrur, Mohali, Bathinda and Ferozepur said.

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