The Union government on Wednesday limited the increase in the price of aviation turbine fuel for domestic airlines to 25%.
This came after an increase in the prices of jet fuel notified earlier in the day amid disruption of energy supplies caused by the conflict in West Asia.
The aviation turbine fuel price list published by Indian Oil, the country’s largest public sector oil marketing company, initially showed an increase of about 115% on Wednesday for some categories of flights, CNBC-TV18 reported.
Shortly after the initial reporting about the spike in the rates, the petroleum ministry said that while the prices of aviation turbine fuel for the domestic markets had been expected to increase by more than 100%, amid the “extraordinary situation” in the global energy market, “only a partial and staggered increase of 25% (only Rs 15/litre) to the airlines” had been implemented.
The cap will insulate the domestic travel costs from the substantial increase in international prices, the ministry said. The decision was taken by state-owned oil marketing companies in consultation with the Ministry of Civil Aviation, it added.
“Foreign routes will pay for the full increase in ATF prices consistent with what they pay in other parts of the world,” the statement added.
State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum revise the prices of aviation turbine fuel and liquefied petroleum gas on the first day of every month based on international benchmarks and the exchange rate.
With the revised rates, jet fuel in Delhi will cost Rs 1.04 lakh per kilolitre instead of Rs 96,638 in March. In Mumbai, the price will increase to Rs 98,247 from Rs 90,451, according to Indian Oil’s listing.
Aviation turbine fuel prices vary across the country because of differences in levies charged by the states.
The price cap announced on Wednesday came as energy supplies to India have been disrupted since the conflict in West Asia broke out on February 28.
Iran has effectively blocked the Strait of Hormuz, the narrow waterbody connecting the Gulf to the Arabian Sea, for most international commercial vessels. About 20% of global petroleum supply passes through the maritime chokepoint.
Global oil prices have increased significantly because of the disruptions. On Wednesday, the benchmark Brent crude was trading at $105 per barrel. It was at $78 per barrel on February 27, a day before the conflict started.
The conflict in West Asia began after Israel and the United States launched an attack on Iran on February 28, claiming that Tehran’s action posed an existential threat to Israel. Washington acts as a guarantor of Israel’s security. Iran has retaliated by striking Israel and US military bases in the region and targeting major cities in Gulf countries.
Israel has been claiming that Iran is close to obtaining a nuclear weapon, which could alter the regional security balance. Tehran has long maintained that its nuclear programme is for civilian purposes.
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