Another Diesel hike wipes out Rs 2.5 cut

PM warns of high oil prices hurting global economic growth

NEW DELHI: Diesel price rose for the 10th consecutive day Monday to wipe out all of the Rs 2.50 per litre cut in rates announced earlier this month through excise duty cut and oil company subsidy, even as the Prime Minister Narendra Modi Monday warned oil producers like Saudi Arabia that high crude prices are hurting the global economy as he sought reasonable rates and a review of payment terms to provide a temporary relief to the local currency.

The government had, with effect from October 5, cut excise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil firms to subsidise the fuel by another Re 1 a litre.

However, the retail selling price continued to rise on subsequent days.

While petrol price remained static Monday, diesel rates were hiked by 8 paise per litre, according to a price notification of state-owned fuel retailers.

With this, diesel prices have in the last 10 days been hiked by Rs 2.51 per litre. This is the fastest increase in rates since oil firms implemented daily price revision in mid-June last year.

It now costs Rs 75.46 per litre in Delhi, a shade higher than Rs 75.45 a litre price when the government on October 4 announced the excise duty cut in 12 months.

Petrol costs Rs 82.72 per litre and has witnessed an increase of Rs 1.22 per litre since the October 4 decision. Petrol on October 4 was priced at Rs 84 per litre.

While in Delhi diesel rates are at their highest ever, in most of the other states such as Jammu and Kashmir it is lower than the peak as the Governor’s administration had matched the Centre's move to cut excise duty and oil company subsidy by a similar cut in local sales tax or VAT, a total reduction of Rs 5 per litre.

Meanwhile, PM Modi Monday warned oil producers like Saudi Arabia that high crude prices are hurting the global economy as be sought reasonable rates and a review of payment terms to provide a temporary relief to the local currency.

India, the world's third-biggest oil consumer, has been over the past two months battered by high crude oil prices that have sent retail petrol, diesel and LPG rates to record high, posed inflationary risks and together with a sliding rupee threatened to upset its current account deficit. Also, unrelenting fuel price rise since mid-August has negated cut in taxes and subsidy.

With Saudi Arabia Oil Minister Khalid A Al-Falih and a UAE minister listening, Modi at his third annual brainstorming with the chief executives of top global and Indian oil and gas companies underscored how crude oil prices at a four-year high were hurting global growth.

Sources privy to the deliberations said Modi also asked chief executives why no new investments in oil and gas exploration and production are coming to India despite the government implementing all the suggestions they made at the previous such meeting, sources said.

The meeting centred around boosting investment in upstream oil and gas production and how oil should be reasonably priced for both consumers and producers.

An official statement issued after the meeting said Modi noted that "the oil market is producer driven and both the quantity and prices are determined by the oil-producing countries".

"Though there is enough production, the unique features of marketing in the oil sector have pushed up the oil prices," it said quoting the prime minister.

Consuming countries, he said, face economic challenges like serious resource crunch due to rising crude oil prices.

He made a strong case for a partnership between the producers and consumers in the oil market as it exists in other markets. "This will help stabilise the global economy which is on the path of recovery," he said.

"Lastly and importantly, he requested for review of payment terms so as to provide temporary relief to the local currency," the statement said without giving details.

The Indian rupee has fallen 14.5 per cent this year, making imports costlier.

The country is over 83 per cent dependent on imports to meet its oil needs.

Later speaking at the India Energy Forum, Saudi Oil Minister said Modi at the meeting raised the issue of "consumer pain" from high crude oil prices.

"We heard it today loud and clear from prime minister (about consumer pain)," Al-Falih said.

He, however, said the "pain" would have been "much louder" but action by Saudi Arabia, the world's largest exporter of oil, to invest in creating spare capacity has used to cushion price shocks.

"Prime minister cautioned producers like myself not to kill the hen that lays the golden egg," he said referring to consumers are the golden hen.

The meeting, which was also attended by Finance Minister Arun Jaitley and NITI Aayog vice chairman Rajiv Kumar, was called to discuss emerging energy scenario particularly ripples from US sanctions on Iran and volatile oil prices threatening growth.