Oil marketing companies (OMCs) on Friday decided to cut petrol prices by Rs 2 a litre with effect from midnight.
"Since the last price change, international prices of crude oil have slid from $112.73 per barrel to $107.41 per barrel, leading to a consequential fall in the international prices of petrol," state-run Indian Oil Corporation (IOC) said.
On the other hand, the rupee has depreciated marginally. Following this trend, it has been decided to pass on the benefit to customers and accordingly, the aforesaid reduction in the retail selling price of petrol is being effected.
IOC has already lost Rs 500 crore (OMCs Rs 1,130 crore) on the sale of petrol so far during the current financial year.
In addition to losses on the sale of petrol, OMCs are suffering under-recovery on the sale of diesel of Rs 8.64 a litre, kerosene of Rs 33.43 a litre and domestic LPG of Rs 439.00 a cylinder. Projected under-recovery of IOC on these three products is expected to be Rs 86,500 crore and of the industry around Rs 1,63,000 crore during the current year. Under recovery on the sale of diesel comes to 57 per cent of this figure.
A raise in diesel prices is expected to happen. Following the January 17 decontrol, the government had allowed OMCs to increase prices by 45 paise a month. This was to reduce the subsidy burden on diesel by Rs 15,000 crore annually. After the cost cut, petrol prices in Delhi would stand at Rs 68.34 a litre, while it was Rs 70.74 following the March 2 raise.