Even as the four oil marketing companies, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and IBP, increased the retail prices of petrol and diesel by around 24 paise a litre today, they simultaneously announced a reduction in the prices of naphtha, fuel oil and low sulphur heavy stock.
While the price of naphtha for non-fertiliser use has been reduced by Rs 650 a tonne, the price of low sulphur heavy stock has been reduced by Rs 470 a tonne and that of fuel oil by Rs 440 a kilo-litre.
The oil marketing companies are learnt to have lobbied hard with the government to effect a second increase in the prices of petrol and diesel, less than a fortnight after the last revision.
While the government was of the view that there was no justification in the price hike since the international prices of crude oil had been softening after the last one averaging $23.55 a barrel, the oil companies argued that even during the last revision they had not been compensated fully for their production cost, corresponding to the international crude price of $24 a barrel.
According to industry sources, the oil companies had been compensated only up to the international crude price of $22.75 a barrel.
This, they said, resulted in the industry continuing to sell petrol and diesel below cost.
Since the country consumes around 40 million tonnes of diesel and 9 million tonnes of petrol annually, the oil companies
