Petrol, diesel prices unlikely to be cut

Petrol and diesel prices are unlikely to be lowered following an 8% cut in rail freight charges announced by Railway Minister Lalu Prasad in the Railway Budget for 2006-07.

About 35-40% of the 54 million tonne petrol and diesel consumed annually is moved on rails, and the cut in freight charges would result in savings of Rs 160 crore for the oil industry, an official of Indian Oil Corporation (IOC) said.

It is, however, unlikely to have any impact on the prices of petrol and diesel as freight assumed to calculate the retail selling price of petrol and diesel was substantially lower than the new freight rates.

"The price build-up of petrol and diesel factors in a notional 50% of the prevailing rail freight. The 8% cut in rail freight will therefore not have an impact on the price build as the new freight charge would continue to
be higher than what is accounted for in the price build-up," the official said.

The move would, however, save IOC between Rs 60-80 crore annually on moving petrol and diesel from refineries to inland consumption centres.