Government has reduced the fuel prices for the second time. First time it was reduced on December 6, 2008 and now again the prices have been slashed. The petrol prices are reduced by Rs 5 a litre, diesel prices are reduced by Rs 2 per litre, while the domestic LPG rate have been slashed by Rs 25 per cylinder.
Petroleum Minister Murli Deora said, “The Cabinet Committee on Political Affairs headed by External Affairs Minister Pranab Mukherjee decided to reduce petrol, diesel, and LPG prices to pass on the benefit of softening international oil prices to consumers.”
Lower oil prices along with reduction in stable food prices have dropped the inflation rate based on wholesale price index (WPI) to 5.6 per cent after it galloped to a 13-year high of 12.91 per cent in August 2008.
While tracking the global crude oil prices, it was found that the prices in India has been reduced by about 70% since it touched a record high of $142.04 in early July. The major oil companies in India including the Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) are currently enjoying a profit of around Rs 2.50 on every litre of diesel and around Rs 8 on every litre of petrol. However, these companies are still not able to recover the loss of around Rs 15 Crore per day on LPG and kerosene sales. These companies have an expectation that the second round of reduction in fuel prices might help them recover the losses.
Pointing the reduction in fuel prices, Hindustan Petroleum Chairman and Managing Director Arun Balakrishnan said, “At the current price level, we are making money (on fuel sales). If this remains, there are chances that we will make profits this quarter.”