Diesel costlier than petrol in Delhi due to VAT increase by state govt, says IOC

NEW DELHI: Diesel price for the first time in living memory crossing the rate of petrol in the national capital on Wednesday was a result of a steep hike in VAT by the state government, Indian Oil Corp (IOC) Chairman Sanjiv Singh said, pointing to lower rates across other cities. According to a price notification of state oil marketing companies, petrol price was unchanged after 17 consecutive increases, while diesel rates were hiked by 48 paise per litre, the 18th daily increase in a row across the country.

Diesel now costs Rs 79.88 per litre in Delhi as compared to petrol price of Rs 79.76. Rates differ from state to state depending on the incidence of VAT.

However, diesel is costlier than petrol only in the national capital where the state government had raised local sales tax or VAT on the fuel sharply last month.

“The Delhi government had increased VAT on petrol from 27 per cent to 30 per cent and that on diesel from 16.75 per cent to 30 per cent on May 5,” Singh told reporters here. This massive hike in VAT resulted in rates going up by Rs 1.67 per litre for petrol and by a record Rs 7.10 for diesel on a single day.

Singh said diesel in all other cities is priced lower than petrol -- the difference between the two being as high as Rs 9.50 per litre in Pune and over Rs 3.50 in most state capitals and major cities. State-owned fuel firms benchmark retail rates to Arab-gulf international oil prices and a formula decides them, he said, adding demand dropped drastically in the aftermath of lockdowns imposed across the globe to curb spread of coronavirus, sending oil prices plunging to multi-year low. This included oil futures falling below zero on one day in US trading.

crore from Rs 16,894 crore net profit in the previous year due to inventory losses and lower refining margins.

The company recorded an inventory loss of Rs 12,531 crore in the fiscal ended March 31, 2020 as compared to a gain of Rs 3,227 crore earlier.

Also, it had foreign exchange loss of Rs 3,945 crore as compared to forex loss of Rs 1,503 crore a year back.