The price of petrol was on Monday cut by 75 paise per litre
- the first reduction in five months - while the already unpopular monthly hike
in diesel rates was put off during the election season.
The reduction, effective midnight, excludes local sales tax
or VAT and the actual cut will be higher, varying from city to city.
The price of petrol was last increased by 60 paise on March
1.
It will cost Rs. 72.26 a litre in Delhi, down 90 paise from
Rs. 73.16 at present. In Mumbai, the fuel will cost Rs. 80.89 a litre against
Rs. 82.07 at present.
Indian Oil Corp, the country's largest oil firm, said since
the last revision in petrol prices, there has been a dip in international oil
rates and the rupee has strengthened against the dollar.
"The combined impact of both these factors has resulted
in reduction in price of petrol, the benefit of which is being passed on to
consumers through price decrease of Re 0.75 per litre, excluding VAT," it
said.
However, state-owned oil firms will not raise diesel prices
by the monthly 50 paise a litre decided in January last year as the loss on the
fuel has dipped below the threshold of Rs. 6 a litre because of the twin
factors.
"The under-recovery on diesel is currently Rs. 5.93 per
litre which is below Rs. 6 a litre, which is the interim subsidy cap
recommended by the Expert Group 2013 of Dr Kirit Parikh," IOC said.
"Hence, the issue of monthly price increase is under
consideration of the government and the matter has been referred to the
Election Commission. A decision regarding revision of diesel retail price shall
therefore be taken on receipt of further advice by the government in this
context," the oil retailer added.
Since January 2013, diesel rates have risen by Rs. 8.33 over
14 monthly installments.
Besides diesel, oil firms lose Rs. 34.43 a litre on kerosene
sold through the public distribution system and Rs. 505.50 on every 14.2-kg
cylinder of domestic cooking gas.
Petrol price was last cut on November 1, when it was reduced
by Rs. 1.15 a litre, excluding local taxes. Losses on kerosene and LPG have
declined from Rs. 36.34 a litre and Rs. 605.50 per bottle, respectively, at the
beginning of the month.
"During 2013-14, IOC has suffered an under-recovery on
sale of three sensitive products of around Rs. 73,000 crore (industry around
Rs. 1,41,000 crore)," the statement said.
The movement of prices in the international oil market and
the rupee-US dollar exchange rate are being monitored closely and developing
trends will be reflected in future price changes, IOC added.
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