In the second price reduction this month, oil companies cut petrol prices by Rs 2.46 a litre (excluding taxes) from midnight tonight. The new price in Delhi will be Rs 67.78 a litre. After raising prices by a record Rs 6.28 per litre (excluding taxes) last month, oil companies had cut petrol prices by Rs 2.02 a litre in early June.
“The downward revision shall vary from Rs 2.46 to Rs 3.22 per litre (including state levies). In Delhi, the price decrease will be Rs 2.46 per litre, as the impact of state tax shall be nil on reduction,” said an Indian Oil release. The Delhi government had exempted the value-added tax component on the price increase of Rs 6.28 a litre last month.
Oil marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum review petrol prices on a fortnightly basis in line with the average international price, but they skipped a review on June 16.
The cut came on account of declining global petrol prices. Though petrol stands decontrolled since June 2010, oil companies have been unable to make regular price changes to reflect market rates. Therefore, the three companies lost Rs 4,900 crore on petrol sale in 2011-12. “During the current year, the corporation has already accumulated losses of Rs 1,053 crore on petrol sales during the first two months,” Indian Oil said. The three companies together lost Rs 2,323 crore.
The price cut could have been higher but the scope of cut was limited by the weakening rupee. “Oil companies continue to closely monitor the international oil prices and the evolving scenario in dollar-rupee exchange rates to assess their potential impact on selling prices in future,” the statement stated.
The uncertain global economic situation has impacted prices of crude oil and petrol. However, the petrol price fall has been sharper than crude oil, leading to lower refining margins. “The prevailing global economic conditions have had an adverse impact on world petrol demand, resulting in petrol margins over crude oil dipping to unsustainable lows. Therefore, price differential of crude and petrol shall also be under a close watch in the coming days,” Indian Oil said.