New Delhi: As global oil prices hit a five and a half year slump, oil companies effected price cuts for Aviation Turbine Fuel (ATF) and non-subsidised cooking gas on Thursday.
In another development, the government hiked the excise duty on diesel and petrol by Rs.2 a litre each to fund its “ambitious infrastructure” programme.
However, the hike would not impact retail prices of petrol and diesel, an Indian oil Corporation official told The Hindu.
“In order to fund the ambitious infrastructure development programme of the Government, particularly the building of 15000 kms of roads…government has decided to increase basic excise duty on petrol and diesel (both branded and unbranded) by Rs. 2 per litre. Allocation of these resources to the road sector will also spur economic activity and employment generation,” an official finance ministry statement said.
The revised excise duty would be effective from Thursday midnight.
Meanwhile, the global oil prices slump resulted in a reduction of non-subsidised LPG and ATF rates.
While non-subsidised LPG prices were cut by Rs.43.50 per 14.2 kg cylinder, ATF prices witnessed a 12.5 percent cut.
Non-subsidised LPG would now cost Rs.708.50 in Delhi, down from the exisiting Rs.752.
Possibly the sharpest cut since it was deregulated in 2002, ATF or jet fuel would cost Rs 52,422.92 per kiloliter in Delhi, down by Rs. 7,520.52. In Mumbai, it would cost Rs.53,861.58/kl down from Rs.61,695.45/ kl.
This is the sixth consecutive reduction jet fuel prices since August last year, with the last cut announced on December 1st, when prices were reduced by 4.1 percent.
When asked whether the trend would continue, Indian Oil spokesperson Amresh Kapoor said prices were reviewed fortnightly and the last review was done on Wednesday.
Prices of global benchmark Brent crude, which fell 49 percent during 2014, hit $53 on Wednesday, with demand continuing to weaken amid a supply glut owing to the US shale boom and the Organization of Petroleum Exporting Countries (OPEC) refusing to cut production.
The fall in global oil prices have pushed ATF prices down to their lowest since 2011.
Prices of ATF had peaked, at Rs.76241.33, in January 2014.
The cut in ATF prices, which make for about 40 percent of the operational costs of airlines, is likely to bring some cheer to India’s cash-strapped airlines.
Civil aviation minister P. Ashok Gajapathi Raju had recently expressed concern over the huge reported losses being incurred by airlines despite the industry growing steadily over the last decade.
Cash-strapped Spice Jet airline welcomed the development with CEO Sanjiv Kapoor tweeting: “ATF rate per KL in Delhi today reduced 12.5 per cent, or by approx Rs 7,500 per KL.Much-needed relief given high cost of operations in India”.