Petrol price to be cut by over Re1 as crude oil turns cheaper

State-owned oil marketing companies are likely to effect a Re1 per litre reduction in petrol prices early next week as an increase in the value of the rupee against the US dollar and a fall in global prices of crude oil makes imports cheaper.

However, diesel prices will go up by the mandated 50 paisa per litre hike every month till the subsidy on the fuel is fully abolished. OMCS are due to announce revised petrol and diesel prices on 31 March.

The Indian rupee has appreciated to a 25-month high of Rs60.50 a dollar from Rs61.44 while the international prices of crude petroleum have dipped to $115.73 a barrel from $118.09 per barrel.

"Rupee has appreciated to Rs60.50 to a US dollar from Rs61.44 and simultaneously international gasoline rates have dipped from $118.09 per barrel to $115.73. The twin factors will lead to a reduction in petrol price on Monday," reports quoting industry sources said.

OMCs revise fuel prices on the 1st and 16th of every month based on average global oil prices and foreign exchange rates in the preceding fortnight.

While petrol prices are market-linked and may go up or down as per global prices of crude, the price of diesel, which is still subsidised, will go up by an average 50 paise per litre every month till such time that the losses on the fuel are wiped out.

Diesel prices have been raised on 14 occasions since then January 2013.

The prices of petrol and diesel were last revised on 1 March when rates where hiked by 60 paisa and 50 paisa respectively. Petrol currently costs Rs73.16 a litre in Delhi while diesel is priced at Rs55.48 per litre.

A litre of petrol, including local taxes, now costs Rs80.96 in Kolkata, Rs82.70 in Mumbai and Rs76.48 in Chennai.

The per litre price of non-branded diesel varies from Rs60.09 in Kolkata, Rs63.86 in Mumbai and Rs59.17 in Chennai.

Since January 2013, diesel rates have risen by a cumulative Rs8.33. However, OMCs say they currently lose Rs7.16 per litre on sale of diesel. The losses may come down if the prices of crude oil softens further and rupee appreciates.