Petrol price cut by Rs2.41 per litre; diesel to cost Rs2.25 less

State-run oil marketing companies in the country have decided to cut retail selling price of petrol by Rs2.41 per litre and that of diesel by Rs2.25 per litre, with effect from midnight tonight.

After the price cut, petrol will cost Rs64.24 per litre in Delhi, Rs71.68 per litre in Kolkata, Rs71.91 per litre in Mumbai and Rs67.01 per litre in Chennai from midnight tonight. The prices, however, are exclusive of local taxes.

Diesel will cost Rs53.35 per litre in Delhi, Rs57.95 per litre in Kolkata, Rs61.04 per litre in Mumbai and Rs56.84 per litre in Chennai.

This is the second reduction in diesel prices after the fuel was deregulated earlier this month. Diesel prices were cut by Rs3.37 per litre on 18 October, the day the announcement was made on diesel price deregulation. It was also the first reduction in diesel prices in over five years  (See: Govt deregulates diesel, retail price down Rs3.37 per litre).

The price of diesel was cut over five years ago, on 29 January 2009, when it was reduced by Rs2 a litre to Rs30.86. Since then, rates had climbed to Rs58.97 a litre. It now costs Rs55.6 per litre in Delhi.

The price of petrol was also revised downwards on 15 October by Rs1.21 per litre (including state levies at Delhi) on the back of declining international oil prices.

The price of petrol has come down steadily from Rs73.60 in July 2014 to Rs64.24 at present in six straight fortnightly reductions.

Right now, petrol costs Rs 66.65 per litre in the national capital while in Mumbai, it is priced at 74.46 per litre.

Announcing the price cut, the country's largest fuel retailer Indian Oil Corporation said the international prices of both petrol and diesel have continued to be on a downtrend since the previous price changes.

''The INR-USD exchange rate has appreciated slightly since the last price change. The combined impact of both these factors warrant the said decrease in retail selling prices of petrol and diesel,'' IOC stated.

The movement of prices in international oil market and INR-USD exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes, it added.

Petrol and diesel prices are both market-determined now or linked to global crude prices. Petrol prices were deregulated in June 2010 by the government.

The government no longer has a role in determining prices of petrol and diesel, and oil companies have the freedom to revise prices according to international rates.

For India, which imports 80 per cent of its petroleum crude requirements, a fall in international prices of oil will result in huge savings, both in import bill and fuel subsidies.

According to the oil ministry's Petroleum Planning and Analysis Cell (PPAC), between 2005-06 and 2013-14 (the first and last full fiscal years of the UPA), OMC under-recoveries were a massive Rs8,33,482 crore - Rs3,98,950 crore on account of diesel, Rs2,03,778 on account of kerosene, Rs2,06,112 crore on account of LPG and Rs22,414 crore on petrol.