Re 1 a litre cut in petrol price likely soon

Petrol price may be cut by as much as Re 1 per litre over the next few days when state-owned oil firms review rates. Petrol prices were last revised on October 27 when they were raised by 29 paise to Rs 68.19 per litre in Delhi following government raising the commission paid to petrol pump dealers. "There has been some reduction in gasoline rates (against which the domestic price of petrol is benchmarked against) giving us some margins (on petrol). But they have moved up again in the last few days. "Also, rupee has appreciated against the US dollar ... we have to take a view (on prices) keeping all these factors in mind," said R S Butola, Chairman of Indian Oil Corp , the nation's largest fuel retailer. The oil companies were making a margin of close to Rs 2 per litre, but considering the impact of rise in gasoline rate and appreciation in rupee, the net available margin may be just around Re 1 per litre. "We will review (prices) in next few days ... may be at the end of the week or early next week," Butola said. The government had in June 2010 deregulated petrol prices giving oil companies freedom to fix rates in line with the cost. However, prices have seldom moved in line with cost and oil companies buckled under political pressure to keep rates checked to help the government manage inflation. Butola said IOC lost Rs 1,167 crore on selling petrol below cost during the first six months of current fiscal. And since the product is deregulated, there will be no subsidy support from the budget to cover these losses. Hindustan Petroleum Corp Director (Finance) B Mukherjee said, "We are making profit on petrol like any other free product." Refusing to divulge the margin on petrol, Mukherjee said in April-September the company had lost Rs 678 crore on selling petrol below its cost. Oil companies have abandoned the practice of revising petrol rates on 1st and 16th of every month by taking the fortnightly average of benchmark gasoline and rupee-USD rate. "We have updated our system to practically do a daily change in prices but as you know there is lot of volatility in international oil prices as well as rupee-USD forex rates," Butola said.