Oil ministry gives in-principle nod to launch petrol, diesel futures: ICEX

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Diesel too hit a new lifetime high with prices in Delhi touching Rs 69.06 a litre, Kolkata Rs 71.61 per litre, Mumbai Rs 73.53 a litre and in Chennai Rs 72.91 per litre. "The Centre is working out a plan to control the increase in fuel prices", he added.

While the price of petrol rose by 16 paise (0.2 per cent) to reach Rs 78.95 in Gurgaon, price in Faridabad also increased by 16 paise (0.2 per cent) to Rs 79.19, by 12 paise (15 per cent) to Rs 78.75 in Ghaziabad, and by 13 paise (0.17 per cent) to Rs 78.87 in Noida.

"Given that these revenue if foregone will not impact states fiscal position, we estimate that on an average, states can cut petrol prices by Rs 2.65/litre and diesel by Rs 2/litre, if the entire revenue gain was to be neutralised".

Amid the rise in fuel prices, crude oil futures fell 2.73 per cent to Rs 4,485 per barrel on Monday, in line with the weak trend overseas as the market eyed an increase in output from top crude producers - Russia, the U.S., and Saudi Arabia.

He also refused to say if the government is planning a cut in excise duty to provide relief to consumers.

In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Central government puts additional tax of Rs 10 on every litre of petrol. "They will cheat the people by cutting price by Rs 1 or 2 per litre of petrol".

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Among states, diesel in Bangalore cost Rs 70.25 a litre. States charge value added tax that varies from state to state.

The Indian Commodity Exchange (ICEX) had approached Sebi seeking its nod to launch petrol and diesel futures contracts. He said that under the GST regime, there is a practice across the world which empowers states to impose tax over and above the highest GST tax rate. He, however, said the ultimate decision regarding this remained with the Petroleum Ministry.

"Moreover, the government has been pretty clear on pricing and is unlikely to reduce excise, which is one factor why oil marketing companies could continue to underperform", he said.

The steep rise in fuel prices comes at an inopportune time for the Narendra Modi-led National Democratic Alliance government, which completed four years in power last week.

Petrol price has been hiked by Rs 3.80 a litre and diesel by Rs 3.38 in Delhi; and Rs 3.76 a litre on petrol and Rs 3.59 on diesel in Mumbai since state-owned oil firms ended a 19-day pre-Karnataka poll hiatus to resume daily price revision on May 14.