Petrol, diesel price cuts after excise cut, says Deora

New Delhi: Petroleum minister Murli Deora has asked prime minister Manmohan Singh for a Re1 per litre excise duty cut on crude oil to enable a reduction in auto fuel prices to curb the rising growing inflation.

Deora has written to Singh and finance minister P Chidambaram stating that the rise in international oil prices this month has seen an erosion of the gains on diesel sales, with oil firms making a loss of Rs0.30-0.35 a litre on sales.

The hardening of international oil prices, which has seen Indian basket of crude rise from $51.74 a barrel in the second fortnight of January to $56.18 dollars this month, has also reduced the profit made on petrol from Rs3.50 a litre to less than Rs2 a litre.

Acording to the petroleum ministry oil companies made a profit of about Rs0.50 a litre on diesel for a brief period, which had since evaporated due to a loss on diesel sales, leaving no scope of price reduction unless the government decides to cut excise duty.

If Deora's request is heeded, petrol price can be cut by Rs2 per litre and that of diesel by Re1 per litre.

The current excise duty on diesel is 8.16 per cent plus Rs3.32 a litre, translating into a total levy of Rs4.98 per litre. Last year, excise duty on diesel was Rs3.41 per litre.