Petrol cheaper by 56 paise a litre from midnight
State-owned retailer Indian Oil Corporation today cut the price of petrol by 56 paise per litre on the back of appreciation in the value of rupee against the US dollar.
Petrol will cost Rs. 67.90 per litre at IndianOil’s petrol pumps in Delhi, effective midnight, against Rs. 68.46 a litre currently, the company announced today.
"It has been decided to revise the petrol prices downward by Rs. 0.56 per litre (excluding state levies in Delhi) with effect from October 9," IndianOil said in a release.
Petrol in Mumbai will be cut by 71 paise to Rs. 74.43 and by 70 paise in Kolkata to Rs. 75.44 a litre. In Chennai, it will cost Rs. 71.48 per litre as against Rs. 72.19 at present.
Peers Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) are expected to follow suit in cutting rates, but the price at their pumps would vary by one or two paise. The three state-run retailers tend to move their prices together.
Commenting on the price cut, R. S. Butola, IOC chairman, said: "We have seen that the rupee has been depreciated. We will be constantly watching the situation and accordingly decide on whether to increase or reduce the prices."
Petrol price was last revised on June 24, when it was hiked by 70 paise. At present, the rupee-dollar exchange rate has shown an appreciating trend. International oil prices, however, continue to remain firm, casting their shadow on petrol prices, IndianOil said, adding there had been significant volatility in international oil prices and the exchange rate.
The retailer said the trends in the international oil market and exchange rate would be closely monitored and would be reflected in future price changes.
The partially convertible rupee closed at 52.64/65 per dollar, while Brent crude was trading at $111.26 a barrel at 1245 GMT.
The government had in June 2010 deregulated petrol pricing, giving oil companies freedom to fix rates in line with costs. Despite the pricing freedom, petrol prices have not moved in tandem with costs. IndianOil, BPCL and HPCL lost Rs. 2,600 crore on the sale of petrol during April-September "due to the inability to change retail selling prices to the desired extent in line with market conditions", according to the IndianOil statement.
Since being a deregulated commodity, losses on petrol are absorbed by the oil companies. Other than on petrol, the fuel retailers also lose heavily on the sale of regulated products such as diesel, cooking gas (LPG) and kerosene.
They currently lose Rs. 11.65 per litre on diesel, Rs. 33.93 on kerosene sold through PDS and Rs. 468.50 per 14.2 kg cylinder of domestic cooking gas.
At this rate, the three firms are projected to lose Rs. 160,000 crore in revenue on the sale of the three products in the current fiscal year, IndianOil added.
With inputs from agencies