Petrol is cheaper by Rs 2.22 a litre in Delhi from Wednesday as state oil firms have decided to cut its rates for the first time in last 33 months under pressure from the ruling Congress, which demand an immediate roll-back of the recent price hike.
“Indian Oil has decided to reduce petrol prices by Rs 1.85 per litre, exclusive of state duties, from Tuesday mid-night,” said RS Butola, Chairman of India’s biggest fuel retailer with about 50 percent market-share.
The reduction is more than rolling back the Rs 1.80 a litre price hike effected 12 days ago reducing the fuel price from Rs 68.64 a litre to Rs 66.42 a litre in Delhi giving a solace to common man who is already fighting a double digit food inflation.
Butola said that he had promised to reduce petrol prices depending on softening of crude oil prices and supporting exchange rate. The companies, however, agreed to rollback petrol prices without waiting for softening of crude oil prices and appreciation of the rupee. Average crude oil price has jumped to $110.38 a barrel from $108.59, when prices were raised. Similarly, the rupee has also depreciated by about 18 paise since then.
Executives in IOC, Hindustan Petroleum and Bharat Petroleum said that a fuel price reduction was a must to retain pricing freedom. The government had freed petrol pricing in June last year, but companies only raised its prices 13 times despite fluctuations in global crude oil prices.
Executives said that authorities had cautioned them that they could lose pricing freedom if they go on increasing the fuel price.
Recently, oil companies had an opportunity to cut petrol prices marginally, but they refrained from taking the move as in the past they had not raised prices to the required extent. Government officials feel this was not a good strategy. “Companies missed an opportunity when petrol prices could have been cut by 25-30 paise,” one government official said, who did not wish to be named.
Executives in three companies said that they had political pressure to reduce petrol prices. Although, petrol is deregulated since June last year, the government indirectly controls its price through the three state oil firms that control 95 percent of country’s retail market. In order to avoid any charges of cartelization, IOC, HPCL and BPCL keep their different prices at their pumps and the difference is negligible one or two paise per litre.