IndianOil cuts petrol price by 56 paise
New Delhi   09-Oct-2012

Market leader IndianOil on Monday reduced petrol price by 56 paise to pass on to consumers the benefit of the rupee's growing strength against the dollar in recent times. The fuel will cost Rs 67.90 a litre at IndianOil's pumps in Delhi against Rs 68.46 due to higher incidence of state tax while the price in Mumbai will come down by 71 paise to Rs 74.43 a litre. In Kolkata, it will go down by 70 paise to Rs 75.44 a litre. Chennai will see a reduction of 71 paise to Rs 71.48 per litre.

The other two retailers, Bharat Petroleum and Hindustan Petroleum, are expected to follow suit in the next couple of days. Their rates would, however, be different by one or two paise with a view to avoiding cartelisation charge.

Petrol price was last revised on June 24 when it was raised by 70 paise a litre. Coming after cooking gas price was raised by Rs 11.42 a cylinder due to increase in dealer commission on Saturday, the cut in petrol price, IndianOil executives said, would give consumers some sense of relief.

While reviewing IndianOil's quarterly performance recently, petroleum secretary G C Chaturvedi had told the company brass to change prices in small doses, preferably not more than Re 1 at a time, to avoid putting too much pressure on consumers. Conversely, this would mean the reductions too would be in small doses, which would require frequent revisions.

True enough, Monday's cut came with warnings from IndianOil that it may not last for long. "The rupee-dollar exchange rate has shown an appreciating trend. International oil prices, however, continue to remain firm, casting their shadow on petrol prices... there had been significant volatility in international oil prices and exchange rate," the company said in a statement.

The company also said the trends in the international oil market and exchange rate would be closely monitored and would be reflected in future price changes. This clearly can be construed as a hint that fuel retailers would exert their freedom to decide petrol price in line with international trends more frequently.

The company said petrol prices have not moved in tandem with costs. The three fuel retailers lost Rs 2,600 crore on sale of petrol during the April-September period "due to inability to change retail selling prices to the desired extent in line with market conditions". Since petrol is a deregulated commodity, the retailers have to absorb the losses on the fuel.