Sate-owned oil companies this month dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantaneously reflect changes in cost.
Prices of petrol and diesel have been revised at 0600 hrs everyday since June 16 and the biggest beneficiary has been the consumer.
Petrol price was at Rs 65.48 a litre on June 16 in Delhi and today it costs Rs 63.71 per litre, according to information available from oil companies.
Similarly, a litre of diesel was priced at Rs 54.49 on June 16 but has since dropped to Rs 53.61, thanks to the softening international oil prices.
"Previously, the benefit of any decline in international oil prices would have been passed on to consumers only after a fortnight, but now it is instantaneously reflected in the billing," explained a senior oil company executive.
The previous practice of revision in rate on 1st and 16th of every month, which began with de-regulation of auto fuel on April 1, 2002, was based on average international oil price and foreign exchange rate in the preceding fortnight.
"Many a times, international rates would fall for one week and then rise in the following. So, the net effect of this in the previous price revision policy was status quo or a marginal change in rate. But now, any decline is passed on immediately and the consumer gets the benefit," he said.
On the other hand, when oil prices rise, this would also hold true.
According to oil company data, petrol price has been cut almost every day with reduction ranging from 11 paise to 32 paise per litre.
Diesel prices have been cut between 2 paise and 18 paise a litre. Rates have declined on every single day since the daily price revision was introduced.
Petrol and diesel prices were de-regulated, or freed from government control from April 1, 2002 and the fortnightly revision in rates kicked in.
The deregulation derailed a bit when international oil prices started to climb after 2004. Fortnightly revision continued but the revision was not completely in snyc with the required price increase.
Petrol price was finally freed in June 2010 and diesel in October 2014.
The daily price revision was implemented after a successful pilot in five cities.
Daily price change will remove the big leaps in rates that need to be effected at the end of the fortnight and the consumer will be more aligned to market dynamics.
The three state-owned fuel retailers had implemented daily revision of retail selling price (RSP) of petrol and diesel on a pilot basis in Udaipur in Rajasthan, Jamshedpur in Jharkhand, Puducherry, Chandigarh, and Vizag in Andhra Pradesh from May 1.
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