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Fuel prices may rise by Rs 5/litre after daily revision restarts

The oil market has turned the tables this month gaining over 50 per cent from last month’s prices, hovering over $30 a barrel now.

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Modi Petrol Price

New Delhi, May 28 : Be ready to face up to Rs 4-5 per litre increase in the pump price of petrol and diesel next month with public sector oil marketing companies bracing up to restart daily price revision of the two petroleum products after the lockdown is lifted in June.

Official sources in public sector oil marketing companies said that all fuel retailers had a meeting last week to evaluate the situation and prepare the roadmap for restarting daily fuel revision exercise post Covid-19 related lockdown.

The exercise, could be started even if lockdown is taken into fifth phase from June once the government gives its nod for marginal revision in petrol and diesel prices daily to prevent OMCs from running into big losses by selling auto fuels below cost. There is expectation that an extension of lockdown will now come with more relaxations that could allow market determined pricing for petrol and diesel.

“The oil market has turned the tables this month gaining over 50 per cent from last month’s prices, hovering over $30 a barrel now and rising. If the rising trend continued, oil companies, which absorbed big increase in excise duty on petrol and diesel early this month, would start making losses on sale of petrol and diesel. The sales volume of auto fuel is already down due to a demand squeeze cause by Covid-19 pandemic and lockdown,” said an official of OMC.

Already, the gap between cost and sale price of petrol and diesel for OMCs has reached around Rs 4-5 per litre. If this has to be covered over a period of time, given there is no further increase in global prices, auto fuel prices may be increased by 40-50 paisa per day for couple of weeks to cover the losses.

However, government sources indicated that retail price of petrol and diesel may not be allowed to increase beyond a point even if daily price revision restarts. This would mean that the petroleum products could increase marginally every day by 20-40 paisa or even lower till the oil companies are able to eliminate the gap between cost and sales.

The increase in retail price under daily price revision would depend on prevailing oil prices and global oil market at the time to determine the retail price. Going by current trend, crude prices are up over 50 per cent to last month’s prices when even benchmark Brent crude had slipped below $20 a barrel. It is at over $30 a barrel now. But lockdown has also curved demand for auto fuel. This could maintain some check on prices.

Petrol is retailing at Rs 71.26 a litre while diesel at Rs 69.39 a litre in Delhi. Before this, the two maintained a price of Rs 69.59 and 62.28 between March 16 and May 4. The prices rose to current level in Delhi from May 5 as state government raised VAT on the products to raise revenue to meet rising expenditure needed to check Covid-19 spread.

Raising retail prices has also become important for OMCs now as the recent steep excise duty hike without resultant increase in petrol and fiscal prices, has substantially brought down its marketing margins from record high level of Rs 12-18 per litre. If it is unable to raise prices when global market is rising, it would start incurring losses that will get steeper as product demand has also fallen by over 50 per cent last month amidst nationwide lockdown.

(Subhash Narayan can be reached at [email protected])

Business

Don’t allow Chinese firms in Train 18 project: CAIT

“The total worth of the project is more than Rs 1,500 crore for 44 Vande Bharat Express Trains,” CAIT said in a statement.

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Auto Sector Automobile

New Delhi, July 11 : The Confederation of All India Traders on Saturday urged the Centre not to allow Chinese firm’s participation in the global tender for semi-high speed indigenous train project of Indian Railway.

The development comes as a part of its “boycott Chinese” products and services campaign in the light of growing border tensions between the two Asian giants.

Consequently, CAIT in a communication sent to Union Railways Minister Piyush Goyal urged him not to allow Chinese state owned firm CRRC Corporation to participate in global tender for semi-high speed indigenous — Train 18 — project.

“The total worth of the project is more than Rs 1,500 crore for 44 Vande Bharat Express Trains,” CAIT said in a statement.

“Since this project of Indian Railways is a part of ”Make in India” call of Prime Minister Narendra Modi, therefore considering this fact and the current critical period, it will be most appropriate not to consider the said Chinese company for the rail project and rather emphasis should be laid more on Indian companies who have been shortlisted for this project-said both trade leaders.”

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Rs 1.20 lakh cr sanctioned for MSMEs under ECLGS

The scheme would help more than 30 lakh units of MSMEs and other businesses restart their businesses post the lockdown.

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MSMEs Sector

New Delhi, July 11 : The government is going all out to ensure that liquidity concerns of the MSME sector are addressed on priority under its Emergency Credit Line Guarantee Scheme (ECLGS).

As of July 9, 2020 public sector and private banks have sanctioned loans worth over Rs 1.20 lakh crore under the 100 per cent Emergency Credit Line Guarantee Scheme, of which close to Rs 62,000 crore has already been disbursed.

There has been a big jump in sanctions in the last couple of weeks and just in last five days up to July 9 sanctions have increased by close to Rs 5,500 crore while disbursement has increased by about Rs 6,000 crore.

In a tweet, office of finance minister Nirmala Sitharaman said: “As of 9 July 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 1,20,099.37 crore, of which Rs 61,987.90 crore has already been disbursed.”

The ECLGS scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Finance Minister Nirmala Sitharaman in May.

To ensure that the scheme achieve its objective of providing adequate liquidity to the MSME segment during the current difficult period, the finance ministry has regularly held meetings with the banks.

A finance ministry statement said that banks from both public and private sectors have contributed to the success of the ECLGS. Loan amounts sanctioned by Public Sector Banks increased to Rs 68,145.40 crore, of which Rs 38,372.88 crore has been disbursed as of July 9.

Similarly, private banks sanctioned loans to the tune of Rs 51,953.97 crore while disbursed Rs 23,615.02 crore.

The scheme would help more than 30 lakh units of MSMEs and other businesses restart their businesses post the lockdown.

As part of the Aatmanirbhar package, the government had announced its plans for Rs 3 lakh Crore as additional credit to MSMEs and small businesses. Such enterprises were to be eligible to receive up to 20 per cent of their existing borrowing as additional loans at interest rates which were capped.

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Jio Platforms receive over Rs 30K cr from 4 investors

Investments of Rs 1.17 lakh crore into Jio Platforms have been announced in the past two months.

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Reliance Jio Platform

Mumbai, July 11 : Reliance Industries on Saturday said that Jio Platforms received subscription amounts of Rs 30,062.43 crore from four investors for 6.13 per cent stake in total.

Among the four investors, Interstellar Platform Holdings (L Catterton) has invested Rs 1,894.50 crore for 0.39 per cent, ThePublic Investment Fund has put in Rs 11,367.00 crore for 2.32 per cent.

SLP Redwood Holdings and SLP Redwood Co-Invest (DE), L.P. (Silver Lake) have invested Rs 10,202.55 for 2.08 per cent and General Atlantic Singapore JP Pte Ltd has put in Rs 6,598.38 crore picking up 1.34 per cent in Jio Platforms.

“We hereby inform that, after receipt of all requisite approvals, Jio Platforms Limited, a subsidiary of the Company, received the subscription amounts from the following investors and allotted equity shares to them,” RIL said in a regulatory filing.

The development comes just days after RIL announced that Jio Platforms has received the subscription amount of Rs 43,574 crore from Jaadhu Holdings, LLC, a wholly owned subsidiary of Facebook Inc, which now owns 9.99 per cent stake in Jio Platforms.

Investments of Rs 1.17 lakh crore into Jio Platforms have been announced in the past two months.

On July 3, RIL and Jio Platforms announced that Intel Capital will invest Rs 1,894.50 crore in Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore, which will translate into a 0.39 per cent equity stake in Jio Platforms on a fully diluted basis.

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