Petrol price cut by 2 rupees a litre after public furore

NEW DELHI Sat Jun 2, 2012 9:44pm IST

1 of 3. A vehicle is seen refueled with petrol at a fuel station in Mumbai June 25, 2010.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   
Coal Mining In The Punjab

Coal Mining In The Punjab

In Choa Saidan Shah miners dig coal with crude pick axes and load it onto donkeys to be transported to the surface earning a team of 4 workers around $10 to be split between them.  Slideshow 

NEW DELHI (Reuters) - State-run oil refiners have agreed to a partial rollback of last month's petrol price increase, a move that was expected after a public outcry over the steepest rise in the country's history.

With effect from Sunday, retail petrol prices will be cut by 2.02 rupees a litre including taxes in New Delhi, state-run Indian Oil Corp (IOC.NS), the biggest fuel retailer in the country, said in a statement.

The three state-run fuel retailers - including Bharat Petroleum Corp (BPCL.NS) and Hindustan Petroleum Corp (BPCL.NS) - tend to move their prices in tandem.

Last month, the companies raised petrol prices by 6.28 rupees a litre, excluding taxes. That translated into 7.54 rupees a litre increase after local taxes in Delhi. The Delhi state government later announced a tax relief, which would have restored increase to 6.28 rupees a litre, but tax cut is yet to be implemented.

Investors and economists had cheered the decision to raise petrol prices for the first time in six months, which allowed the companies to recover some of the losses they had racked up due to higher oil prices and a plunging rupee.

Every one rupee fall in value of the Indian currency against the dollar requires an increase of 0.77 rupees/litre in retail price of petrol, while every dollar decline in delivered prices of Singapore gasoline means prices need to go up by 0.34 rupees.

But the reform provoked dissent within the ruling Congress party-led coalition, furious street protests and a national strike on Thursday organised by opposition parties seeking to exploit popular anger with the increase.

Softening Singapore gasoline prices and global oil prices have partially offset the impact of a declining rupee, offering a window for a cut.

"Since (the) last pricing cycle, though international oil prices have decreased quite significantly, the (dollar-rupee) exchange rate has shown further deterioration," Indian Oil said in the statement, justifying the quantum of price cut.

The three state-run fuel retailers review gasoline prices every two weeks.

Company executives had earlier said that the prices could be revised by June 1 after a regular review of international oil, gasoline and foreign exchange rates.

But June 1 came and went with no change in retail prices amid speculation that the government had not wanted to be seen to be bowing to the opposition-organised protests.

The political backlash, however, has prompted the government to delay implementation of a much bigger reform sought by investors - increasing the price of diesel and kerosene, which are used by the poor and in public transport.

Any increase would fuel inflation at a time when Asia's third-biggest economy is slowing down.

While petrol accounts for around 10 percent of India's annual fuel consumption, diesel demand hovers around 40 percent. Cheaper prices have led to a surge in the demand of diesel cars, especially from a growing middle class.

(Reporting by Nidhi Verma; Editing by Daniel Magnowski and Mike Nesbit)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
thambee wrote:
these oil companies and the government don’t see whether election code is in effect while raising the prices,but when it comes to reducing the rates, the election code comes to the fore for these fellows.
why should i pay more for their mistake?

Jun 02, 2012 6:52pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

HCL Tech Results

HCL Tech Results

Q4 dollar revenue disappoints investors, shares fall  Full Article 

Fed Policy

Fed Policy

Fed presses forward with bond buying, cites uptick in inflation.  Full Article 

Q2 Profit Slips

Q2 Profit Slips

Samsung sees tough second half  Full Article 

Chinese Economy

Chinese Economy

China should set lower 2015 GDP growth target of 6.5-7 percent - IMF  Full Article 

Default Imminent

Default Imminent

Argentina fails to reach debt agreement   Full Article 

Economy Reboots

Economy Reboots

U.S. economy back on track with strong second-quarter rebound  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage