Oil marketing companies have decided to go for a hike of Rs 2 a litre in retail selling price of petrol with effect from midnight on Saturday.
Prices of petrol were last revised upwards on June 1 by Rs 0.75 a litre (excluding state levies) mainly on account of devaluation of the rupee.
Since last price change, the rupee has further depreciated from 55.32 per dollar to 57.08 per dollar. Further, international petrol prices have also hardened during this period.
"The combined impact of both these factors, mainly depreciation of the Rupee, has warranted the increase in MS prices by Rs 2 a litre (excluding VAT)," an IndianOil Corporation statement said.
According to oil marketing companies (OMCs), the above factors have also led to an increase in under-recovery on sensitive products. Currently, OMCs are suffering under-recovery on sale of diesel of Rs 6.31 a litre, kerosene of Rs 27.75 a litre and domestic liquified petroleum gas of Rs 335 a cylinder.
The estimated under-recovery of the Corporation on sale of these three sensitive products is estimated to be around Rs 60,000 for the 2013-14 financial year, while the industry estimates are around Rs 1,12,500 crore.
"The movement in international oil markets and rupee-dollar exchange rate has been put on a close watch and developing trends will be reflected in future price changes," the statement added.