Petrol price cut likely ahead of festive season

The oil marketing companies are all set to cut petrol prices by two to three rupees a litre to provide some relief to consumers ahead of the forthcoming festive season. The oil marketing companies will pass on to the consumer the recent twin benefits of the slight strengthening of the rupee against the US dollar and the drop in international petrol prices.

An oil industry executive indicated that the price can be corrected by up to Rs 3 a litre. This will be the first price reduction in petrol after nearly five months.

Prices were last cut by Rs 3 a litre from May 1. Since then, there have been seven rounds of price hikes to pass on the impact of a depreciating rupee and high international prices. In the current fiscal year, the  price of petrol in the Delhi has gone up by over 11 per cent to Rs 76.06 a litre, according to the IndianOil web site.  

Petrol prices were last hiked by nearly Rs 2 per litre (including taxes) from September 14. During first fortnight of September, the average International prices of petrol had gone up from $ 114.44 per barrel to $117.40. The average rupee-dollar exchange rate had also fallen from from Rs 63.88 per dollar to Rs 66.02. But both trends have reversed in the current fortnight. The average exchange rate in the current fortnight has been around Rs 62.64.

Petrol is a deregulated fuel unlike diesel, kerosene and domestic cooking gas where the oil marketing companies - IndianOil, Bharat Petroleum and Hindustan Petroleum - have to follow government directives on pricing.   

"Should the recent trend of stabilization and appreciation of the rupee-dollar exchange rate continue and international petrol prices also not move adversely, the beneficial effect of the same will be passed on to the consumers in the next fortnight," an IndianOil statement had said on September 13.