Petrol Price Slashed by Rs 1.85 a Litre

New Delhi, Nov 15: India's fuel retailers Tuesday cut petrol prices by Rs.1.85 per litre, excluding state taxes and levies, which should make its price cheaper by Rs.2.22 per litre in the national capital from midnight, bringing welcome relief to vehicle owners.

The move comes against the backdrop of some allies of the United Progressive Alliance (UPA) government and opposition parties alike criticising the move earlier this month by oil retailers to hike petrol prices by Rs.1.80 per litre.

However, IndianOil Corp (IOC), the largest of the three state-run oil marketing companies (OMCs), said a fall in global crude prices and the rupee remaining stable at 49.30 to a US dollar were the reasons it could bring down prices of petrol.

The last time prices were slashed was in January 2009.

Incidentally, in early November when OMCs announced a hike in petrol prices, the rupee was still hovering over 49 to a dollar.

"IndianOil reviews motor spirit prices on fortnightly basis and based on the review, fixes prices for the next fortnight. In keeping with this practice, IndianOil has reviewed the pricing cycle as prevalent in the last fortnight," the company said Tuesday.

"The review reveals that at the current prices, there will be an over-recovery of Rs.1.85 per litre. It has, therefore, been decided to revise the MS (motor spirit) prices downward by Rs.1.85 (excluding state taxes and levies) with effect from Nov 16," the company added.

The current and new petrol prices in the four metros are as under:

                   Old          New

New Delhi  Rs.68.64  Rs.66.42

Kokata      Rs.73.15  Rs.70.84

Mumbai    Rs.73.81  Rs.71.47

Chennai    Rs.72.73  Rs.70.38

"This is some relief for the middle class. But petrol prices are still too high when you compare them to diesel. Government should bring it down further," said Ravi Ahuja, a 26-year-old sales executive with an FMCG firm.

OMCs, however, continue to incur under-recoveries on account of selling diesel, kerosene and cooking gas below their international prices. All the three fuels are still regulated by the government, compared to petrol which is sold at a de-regulated price.

"In case of diesel, the international prices have firmed up (a trend exactly opposite to petrol) during the fortnight and as a result, the under-recovery of the company on diesel has increased from Rs.8.58 to Rs.10.17 per litre," IOC said.

The under-recoveries on kerosene and cooking gas are Rs.25.66 per litre and Rs.260.50 per cylinder, respectively. The projected total under-recovery of IndianOil for 2011-12 (excluding petrol) is estimated to be over Rs.71,000 crore and for the OMCs together would be around Rs.1,30,000 crore.