India has increased petrol and diesel prices for the third time within nine days, with petrol in Delhi now priced at 99.51 Indian Rupees per litre and diesel at 92.49 Indian Rupees per litre. As Nepal imports petroleum products from India, this price hike could have repercussions for Nepal as well. Rising crude oil prices in the international market have caused losses for Indian oil companies, necessitating the price increases.
9 Jestha, Kathmandu – India has once again raised fuel prices. Petrol prices in Delhi have risen by 87 paise to 99.51 Indian Rupees per litre, while diesel prices increased by 91 paise to 92.49 Rupees per litre. According to Indian media reports, this is the third price hike in just nine days. Previously, petrol and diesel prices were raised by an average of 90 paise per litre on May 19 and increased by 3 Rupees per litre on May 15.
Potential Effects in Nepal
Nepal imports petroleum products from India, with Nepal Oil Corporation purchasing petrol, diesel, and other fuels from Indian Oil Corporation (IOC). Therefore, fluctuations in fuel prices in India can affect Nepal’s market. A member of the Nepal Oil Corporation’s board noted, “If the purchase price from India rises substantially, Nepal Oil Corporation’s costs will increase, which may necessitate price adjustments in the domestic market.” However, there is no certainty regarding immediate changes in Nepal’s fuel prices.
Nepal Oil Corporation’s board adjusts prices approximately every 15 days through an automated system based on international market conditions. Prolonged high crude oil prices are likely to increase pressure on fuel prices in Nepal. In response, the government has declared public holidays on Saturdays and Sundays to reduce fuel consumption.
Reasons Behind Fuel Price Increases in India
The primary factor driving these price hikes is volatility in international crude oil markets. Prior to the conflict between Iran and the United States, crude oil was priced at around 70 USD per barrel; now it has surpassed 100 USD per barrel. As oil prices rose, Indian oil companies faced financial pressures and had to increase prices to cover losses. If crude oil prices remain high for an extended period, petrol and diesel prices may continue to climb.
Fuel prices in India are set based on crude oil prices on the international market and the exchange rate of the Indian Rupee against the US Dollar. Government-owned oil companies publish new prices daily at 6 a.m. under the “Daily Price Revision” or “Dynamic Pricing System.” The final prices consumers pay are higher than the base price due to additional taxes and charges.
Price Stability Since 2024
Since March 2024, petrol and diesel prices in India had remained stable. Ahead of the 2024 Lok Sabha elections, the government reduced prices by 2 Rupees per litre to provide relief to consumers. Despite political sensitivities, the government maintains a system of adjusting prices periodically—approximately every 15 days—based on the average international crude price.
Indian government oil companies—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—had been operating at a loss due to rising international oil prices. Joint Secretary of the Petroleum Ministry, Sujata Sharma, stated that these companies were incurring monthly losses of about 30,000 crore Indian Rupees from petrol, diesel, and LPG sales. To mitigate this, the government reduced special excise duties, cutting petrol duties from 13 Rupees to 3 Rupees per litre and diesel duties from 10 Rupees to zero.
On Sunday, Indian Prime Minister Narendra Modi, speaking at an event in Telangana, urged careful and restrained use of petroleum products, considering the geopolitical situation in West Asia. He emphasized the importance of cautious consumption of petrol, gas, and diesel to save foreign currency and minimize adverse effects from the ongoing conflict.
