Indian Oil corporation is in the process of implementing an industry wide decision to push superior branded motor fuels and clip supplies of cheaper unbranded normal fuel. If this goes ahead, the other two state-run oil companies Bharat Petroleum and Hindustan Patroleum will also follow suit.

Branded fuels are costlier than normal fuel and have pre-mixed additives which claim to improve mileage, lower emissions and ensure long life of the engine due to decreased friction. In Delhi normal Diesel costs Rs. 31.76 a litre while the branded variety of the same costs Rs. 33.01, similarly normal petrol costs Rs. 45.52 while branded fuel costs 48.52 Rs. per litre.

The total market of the branded fuel segment stands at 25% in the metro and while the prices of unbranded fuel is decided by the government,  the companies are free to decide the prices of branded fuels. Concerned with rising crude oil costs in the international market and mouting loses and the fact that economic benefit of raising prices of branded fuel is very limited,  the move is being seen a desperate step by the oil companies to coerce government into action and raise prices.

“We are in such a situation that every penny we can squeeze will count. The squeeze will further tighten if the rupee starts appreciating against the dollar,” a top oil company executive said.

The government doesnt allow periodic revision of pump prices of unbranded fuel in line with the international crude prices. At present the oil companies are loosing Rs. 11 on every litre of pertol and Rs. 13 on every litre of Diesel sold. The present pump prices correpond to about 70-75$ a barrel of crude while the current crude prices are hovering around 120$ and are set to increase even further. The subsidy on kerosene and cooking gas coupled with the fuel prices, the oil companies are running losses of almost 550 crores daily.

Agreed the international prices are increasing rapidly but no one asks why fuel is taxed so heavily on this country? Why can’t the government decrease the taxes instead of rising the prices of fuels?

And in all this, no one seems to know what happend to the “freedom of choice”?