The price of aviation turbine fuel (ATF) in Delhi was revised to Rs 33,575.37 a kilolitre, up 56.5 per cent from Rs 21,448.62 in May. owing to a rise in international prices.
Meanwhile, the price of non-subsidised liquefied petroleum gas (LPG) rose by Rs 11.5 to Rs 593 per 14.2 kilogram cylinder. Though domestic airline operations started last week, the demand was comparatively low. While ATF prices are revised once in 15 days, LPG prices change on a monthly basis.
“A major reason for the increase in prices is the rise in ATF prices in international market. Our domestic ATF price is based on a formula and since February, it was on a downward trend,” said a senior HPCL official. ATF price in Mumbai was seen at Rs 38,543.48 a kl, while in Kolkata it was Rs 33,070.56 per kl.
Till February this year, the prices of ATF was in a higher range of around Rs 65,000 per kl, which started decline after the international crude oil prices started its downward curve, early this year. In February this year, the prices was seen at Rs 64,323.76 per kl. “OMCs follow import parity pricing. In addition, crude prices have also increase touching almost $38 a barrel now. This rise in crude prices and better demand in ATF has led to an increase in prices, said K Ravichandran, a senior vice-president at Icra.
A $1 increase in ATF price results in 0.5-0.7 per cent impact on profit margins of airlines. Oil marketing companies have started revising ATF prices every fortnight since March 22. They earlier followed monthly average of global prices but have now started using the trailing fortnightly average.
The hike comes at a time when the Union government has asked airlines to operate 30 per cent of their regular flight schedules. They are, however, running services with an average of 70-100 persons on board.
The retail selling price of LPG in Delhi market for the month of May 2020 was, however, reduced from Rs 744 to Rs 581.5 a cylinder for all consumers in line with drop in International prices. “For the month of June, 2020, there has been an increase in International prices of LPG. Due to increase in the prices in international market, the RSP of LPG in Delhi market will be increased by Rs 11.50 per cylinder,” IOC said in a statement. However, this increase will not impact the Pradhan Mantri Ujjwala (PMUY) beneficiaries, as they are covered by the Pradhan Mantri Garib Kalyan Yojana, and entitled to a free cylinder till June 30.
Brent crude prices was seen up at $38.11 a barrel at one point on Monday, after hitting a 21-year low, and US oil futures slumping into negative for the first time in history. The limited storage facilities across the world had led to huge selling by oil traders in April. The West Texas Intermediate (WTI) prices also climbed up and was trading at $35.24 per barrel on Monday.
“Crude oil prices have kept the upper trading range on expectations of extension in output cuts from Opec-plus nations. OPEC plus nations may hold meeting in coming week by June 8-9 to discuss and review output cuts. Saudia Arabia has already proposed extension of output cuts till the end of the year,” said a report by HDFC Securities.