News Hour- Petrol prices may go up by Rs 2.25 from January 1

NEW DELHI: State-run oil firms plan to raise petrol prices by about Rs 2.25 a litre from Sunday unless the government asks them to defer the move in view of assembly elections, company executives said.
Oil companies revise petrol prices every two weeks but in the middle of this month, the government told state firms to refrain from any increase as the move could cause uproar during the winter session of Parliament. As a result, the price rise would be relatively steeper as oil firms need to make up for the losses, they said. 
Companies' executives say that compared to the landed price of imported petrol, domestic rates need to be raised by Rs 1.90 per litre, excluding local taxes. "If the entire loss is passed on to the consumer, with 20% state duties, the fuel will be costlier by 2.28 a litre in the Capital," one executive said. State levies vary from state to state.
Executives said a decision in this matter was expected on Saturday after securing an informal nod of the government. "There is some uncertainty as assembly elections have been declared in five states and companies may not get a green signal," an executive said. Elections will be held in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur between January 28 and March 3. Officials in the petroleum ministry claimed that they would not intervene. "Oil companies are free to charge market rates for petrol and they should not hesitate in exercising their pricing freedom," a ministry official said, requesting anonymity. 

The government allowed state oil firms to align petrol price with international rates on June last year, but companies always informally consulted it before taking any pricing decisions.
Until November, domestic petrol rates were cut or raised whenever it seemed politically acceptable. Subsequently, oil companies have systematically revised prices every two weeks, except for the fortnight ended December 15. "Had oil firms not deferred the price revision, petrol would have become costlier by 1.02 per litre," executives said.
Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum raised domestic retail prices of petrol by Rs 1.80 a litre on Nov 4 in Delhi. They cut the price by Rs 2.22 per litre and Rs 0.78 a litre in the following two fortnights.
(Source- http://economictimes.indiatimes.com/)