Aided by the falling international crude prices, the oil marketing companies on Saturday announced a cut of Rs. 2.02 a litre in petrol prices. The reduction came into effect on Saturday night.
Petrol will now cost Rs.71.16 in Delhi. In Mumbai, the cost will come down by Rs.2.12, to Rs.76.45. In Kolkata, it has come down from Rs.77.88 to Rs.75.81, a reduction of Rs.2.07. In Chennai, it will be Rs.75.40, down by Rs.2.13.
The decision to cut the prices was taken after a fortnightly review meeting of the oil companies. On May 24, the oil companies jacked up the prices, in the steepest ever increase, by Rs.7.54 a litre, bringing sharp criticism to the ruling United Progressive Alliance (UPA) — even from its allies — and prompting the Opposition parties to call a nationwide bandh for May 31.
The Rs.7.54 increase was based on an average gasoline price of $124.37 a barrel and the rupee-dollar exchange rate of Rs.53.17 in the first fortnight of May. However, the gasoline price has since then dipped to $115.77 in the second fortnight, but the exchange rate has worsened to Rs.54.96.
The fall meant a cut in the petrol prices of Rs. 1.68, excluding local sales tax or value-added tax. In Delhi, the reduction would come to Rs. 2.02, after including a 20 per cent VAT, an official statement said.
It said the Indian basket of crude had come down from $113.08 a barrel to $106.68. “The cut could have been more for consumers, had the rupee's performance against the dollar not worsened further,” a senior oil company official said.
The oil companies are suffering heavy under-recoveries on diesel, kerosene and domestic LPG. The sales prices of these sensitive products were last revised in June 2011. Compared with the last revision, the current under-recovery, as on June 1, on diesel has gone up from Rs. 6.13 a litre to Rs. 12.53; on kerosene from Rs. 24.16 a litre to Rs. 30.53; and on an LPG domestic cylinder from Rs. 331.13 to Rs.396.00. At these rates, the under-recovery during 2012-13 is likely to be around Rs.96,000 crore. The next revision of petrol prices is due on June 16.