Petrol prices may be slashed by about Rs 2 per litre from tomorrow, the first reduction in rates since January, 2009.
The reduction, possible because of a fall in global oil rates, comes days after state-owned oil companies raised petrol prices by a steep Rs. 1.80 per litre.
The average price of gasoline (petrol) in the first fortnight of November was about $ 5 per barrel lower than the rate which formed the basis for the price revision on November 3, said a top executive at one of the three state-owned fuel retail firms.
“Since petrol is a deregulated commodity which moves in tandem with international rates, we intend passing on the reduction to the consumers,” he said.
Gasoline, or petrol prices, averaged $ 115.85 per barrel during the first half of November, as against the $ 121.67 per barrel average during the second fortnight of October, which formed the basis for the Rs. 1.80 per litre price increase.
In addition, the rupee has averaged Rs 49.20 per US dollar this month, higher than the Rs. 49.40 per U.S. dollar exchange rate in October.
Oil companies revise the price of petrol, which was freed from government control in June last year, on the basis of fortnightly average international oil prices.
“The reduction in oil price warrants a cut of Rs. 1.86 per litre in the petrol price, excluding all taxes,” the official said, adding that the retail price - after taking into account the tax incidence - would go down by about Rs 2 per litre.
This will be the first reduction in petrol prices in 33 months
State-owned oil firms had on November 3 hiked petrol prices by Rs 1.80 per litre, the fourth increase this year, as the rupee fell from 46.29 a dollar to Rs 49.40 a dollar.
At the time of the price hike, they had stated that petrol prices would be reduced if the rupee does not depreciate further and international oil prices fall.
“Gasoline price are today lower than even crude oil price. But today, the rupee has gone touched a 32-month low of Rs 50.45 to a dollar. At the end of today, we will take an average for the fortnight and revise petrol rates,” the official said.