Poll effect: Fuel prices remain flat though crude is dearer

  • Apr 25, 2019
  • Economic Times

BENGALURU: Motorists tanking up at fuel depots have not been complaining for sometime now as there has been no drastic change in petrol and diesel prices over the past month-and-a-half, though there have been daily revisions.

Industry stakeholders, including retail dealers, say this has to do with the Lok Sabha polls which are under way and anticipate a steep hike in prices soon after the election results on May 23.

The largely flat fuels prices contradict the sharp spike during the said period in crude oil prices, based on which the retail prices had to change.

“Considering the variation in crude oil prices, retail prices of petrol and diesel should have been hiked by at least Rs 7 per litre, but no such change has been noticed. It is a clear indication that the Centre has arm-twisted oil marketing companies (OMCs) to keep retail prices in check during elections,” said Rajiv Amaram, joint secretary of Confederation of Indian Petroleum Dealers (CIPD).

Crude oil price was $54.52 per barrel on March 10, when elections were announced. Since then, it went up and touched $66.07 on April 24. But retail prices have barely changed in the period.

In Bengaluru, for instance, retail prices of petrol and diesel were Rs 74.84 and Rs 69.88, respectively on March 10. They were being sold at Rs 75.33 and Rs 68.61, respectively on April 24. Most of the days, the prices remained unchanged.

“We are anticipating that prices, which have been currently bridled for obvious reasons, would go up soon after elections,” said KM Basave Gowda, president of Akhila Karnataka Petroleum Dealers Association.

He recollected similar instances during 2017 Gujarat assembly polls and Karnataka elections last year, when retail prices remained unchanged during elections and skyrocketed once the poll process ended.

As the OMCs are free to revise the prices, the Centre introduced a policy of daily revision in June 2017. Stakeholders allege the petroleum ministry may have prevailed upon these companies to keep prices in check.

US sanctions to have a bearing

Gowda said while the unwritten curbs would be lifted soon after elections, retail prices are set to go up for other global reasons such as the US sanctions to be imposed on Iran oil on May 2. While it imposed sanctions on Iran earlier this year, the US relaxed the sanctions and allowed India to purchase oil from the Gulf country for 180 days.

“Price of crude oil is expected to go up to $80 towards May-end. While this would be one reason, retail prices are set to spike as OMCs would also try to make up for the losses due to the ‘freeze in prices’ during elections,” said Gowda.

Apart from retail consumers, the worried lot are the bulk consumers such as bus and truck operators.

“While our businesses have already been hit due to the daily price fluctuations, the sudden surge in prices anticipated in May would add to our misery. As a long-term measure we will yet again demand that the daily revision should be abolished and motor fuel be brought under GST,” said Sunil Sharma, vice-president, Bus Owners Confederation of India.

‘Price dynamics not related to polls’

Representatives of OMCs, however, sought to downplay the situation, insisting the price dynamics isn’t related to elections.

“It’s only a coincidence that the retail prices were flat during the poll season,” said GV Krishna, independent director of Hindustan Petroleum Corporation Limited (HPCL). “As far as the fear of price rise due to Iran issue is concerned, we hope the government of India would take adequate measures to tackle it,” he added.