Petrol price cut by Rs 3 a litre

The retail selling price of petrol has been cut by Rs 3 a litre from midnight today across India, following a decline in international crude oil prices, while the revenue loss on diesel has touched a low of Rs 3.8 a litre.

Petrol prices were last decreased by Rs 1.2 a litre in Delhi on April 16. Since then, international prices of petrol have gone down from around $116 a barrel to around $107 a barrel. The rupee versus dollar exchange rate has also appreciated slightly from Rs 54.51 a dollar to Rs 54.26 during the same period.

“It has been decided to pass on the benefit to customers and, accordingly, the aforesaid reduction in the retail selling price of petrol is being effected,” Indian Oil Corporation said.

However, for oil manufacturing companies (OMCs), the happy news came on the underrecovery front. The government had gone for a phase-wise diesel decontrol on January 17 this year to eliminate the then Rs 9.60 loss on the sale of every litre of diesel. According to government calculations, the underrecovery on diesel was expected to be in the range of “Rs 6 a litre by April”.

The drop in international prices has, however, brought it down to Rs 3.80 a litre, giving a major relief to OMCs. Petrol price since the beginning of March has come down by Rs 7.65 a litre to around Rs 63.09 in Delhi. The difference between petrol and diesel prices is still high at Rs 16.37, although OMCs have increased diesel price thrice since January.

 

Diesel price was last increased by 45 paise a litre on March 22. OMCs decided to skip the monthly raise this month. With the Karnataka state elections due on May 5 and Parliament in session, the government has informally asked the companies to take a pause. Though the government’s subsidy burden is expected to come down dramatically; underrecovery on sale of a litre of kerosene continues to be Rs 27.93, while that on a cylinder of liquefied petroleum gas is Rs 379.

Prices of non-subsidised LPG cylender has also been reduced by Rs 54.