State-owned oil firms may opt to revise petrol prices every fortnight to reflect changes in the global oil market in the free pricing regime that kicks in from next week.
Petrol prices were freed from government control last month resulting in a Rs 3.50 per litre hike in rates in Delhi, but modalities of subsequent retail price adjustments were left to the industry to deliberate and decide.
Sources said Indian Oil, Bharat Petroleum and Hindustan Petroleum today began consultations on modalities like the frequency or interval at which prices will be revised and if the PSUs should have uniform rate that would change on same date.
Private firms Reliance Industries, Essar Oil and Royal Dutch/Shell too are being consulted in the exercise.
Sources said most retailers favour fortnightly revisions in retail rates to reflect changes in cost of raw material (crude oil), but the nation's largest oil firm IOC was at variance, wanting rates not to be revised too often.
Those in favour of a 15-day cycle for price adjustment argue that oil firms already have a mechanism of calculating the desired fuel prices on 1st and 16th of every month. Also, rates of aviation turbine fuel (ATF), which was freed from government control in 2002, change with cost every fortnight.
But IOC does not want frequent price changes, saying a fixed date for revision may lead to hoarding at pump end.
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The BJP-led NDA government had in 2002 decontrolled petrol and diesel prices and rates from April 1, 2002, were revised every fortnight for almost 21 months. The practice was stopped a few months before the May General Election in 2004, and controls were back when the when UPA came to power.
Sources said modalities are likely to be finalised by next week and pump rates would be revised accordingly.
An Empowered Group of Minister headed by Finance Minister Pranab Mukherjee had on June 25 decided to free petrol and diesel prices from government control. While petrol was being decontrolled with immediate effect, the implementation of the same in diesel was put on hold for the time being.
Freeing of petrol price resulted in a Rs 3.50 per litre hike in petrol price while diesel rates were raised by an ad-hoc Rs 2 per litre instead of Rs 3.80 per litre increase required to align them with international market.
Also, domestic LPG prices were increased by Rs 35 per 14.2-kg cylinder and kerosene rates hiked by Rs 3 per litre to cut government's fuel subsidy.