Shares of three state-run oil marketing companies fell by 0.88% to 1.57% at 9:51 IST on BSE after the price of petrol was cut by Rs 0.75 per litre, while the monthly hike in diesel rates was put off during the election season.
HPCL (down 1.57%), BPCL (down 1.39%) and Indian Oil Corporation (IOC) (down 0.88%), edged lower.
The S&P BSE Sensex was down 12.69 points, or 0.06% at 22,373.58.
The reduction in petrol price, effective midnight Tuesday, 1 April 2014, excludes local sales tax or VAT and the actual cut will be higher, varying from city to city.
The price of petrol was last revised upwards by Rs 0.60 per litre (excluding VAT), effective 1 March 2014. Since last price change, there is a declining trend in international prices of crude and the rupee has strengthened against the dollar. The combined impact of both these factors has resulted in reduction in price of petrol, the benefit of which is being passed on to consumers through price decrease of Rs 0.75 per litre (excluding VAT), IOC said in a statement.
PSU OMCs suffer under-recovery on domestic sales of diesel, kerosene and LPG at government controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals. The government has already freed pricing of petrol.
In pursuant to Government of India order dated 17 January 2013, PSU OMCs had been authorized to increase the retail selling price of diesel (retail) within a small range every month until further orders. Accordingly, since then, retail diesel prices have been revised every month. However, the under-recovery on retail diesel is currently Rs 5.93 per litre which is below Rs 6 per litre, which is the interim subsidy cap recommended by the expert group 2013 of Dr. Kirit Parikh. Hence, the issue of monthly price increase is under consideration of the government and the matter has been referred to the Election Commission. A decision regarding revision of diesel retail price shall therefore be taken on receipt of further advice by the government in this context, IOC said.
The movement of prices in international oil market and rupee-dollar exchange rate is being closely monitored and developing trends of the market will be reflected in future price changes, IOC added.
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