For the second time in as many months, the government today cut the prices of petrol by Rs 5 a litre and diesel by Rs 2 per litre, while the domestic LPG rate was also slashed by as much as Rs 25 per cylinder.
“The Cabinet Committee on Political Affairs headed by External Affairs Minister Pranab Mukherjee decided to reduce petrol, diesel and LPG prices to pass on the benefit of softening international oil prices to consumers,” Petroleum Minister Murli Deora told reporters here.
“The reduction will be effective from midnight tonight,” said Mukherjee.
“We are giving relief to housewives,” Railway Minister Lalu Prasad said pointing to the cut in the cooking gas price.
The reduction comes on the back of the Rs 5 a litre cut in petrol price and Rs 2 per litre cut in diesel price on December 6 last year.
The move to cut fuel prices comes a day after Sonia Gandhi, chairperson of the Congress-led United Progressive Alliance, said prices of petroleum products were likely to be reduced soon. “The prices of petroleum products have decreased recently and I expect that soon they will dip further,” she said.
Lower oil prices along with stable food prices have helped the wholesale price index (WPI)-based inflation rate drop to 5.6 per cent after it galloped to a 13-year high of 12.91 per cent in August last year.
Tracking global crude oil prices, the Indian basket of crude has declined over 70 per cent since it touched a record high of $142.04 in early July. The Indian crude basket has averaged $44.12 a barrel so far this month, up over 9 per cent from $40.61 in December.
The oil marketing companies — Indian Oil (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — are currently making profit of around Rs 2.50 on every litre of diesel they sell and around Rs 8 on every litre of petrol, even after the price cut last month. The three fuel retailers, however, still claim under-recoveries of around Rs 15 crore per day on LPG and kerosene sales. Another round of price cut might add to the under-recoveries. This might also affect expectations of a profitable Q4 for the companies. "At the current price level, we are making money (on fuel sales). If this remains, there are chances that we will make profits this quarter," Hindustan Petroleum Chairman and Managing Director Arun Balakrishnan had told Business Standard earlier this month.
