Oil companies hint at cut in petrol prices next month
Close on heels of the steepest ever hike, petrol prices may be cut by Rs 1.50-1.80 early next month if current trend of softening in international oil prices continues, oil companies indicated today. Worried over the political backlash, the government fielded chief executives of the state-owned oil companies to explain the compulsions that led to the Rs 7.54 a litre increase in petrol price, the third in a year but the first in almost seven months.
"Current trend (in international prices) indicates that prices (of petrol) can come down," IOC Chairman R S Butola told reporters here. Oil companies revise petrol prices on 1st and 16th of every month on the basis of average international oil price and the foreign exchange rate in the previous fortnight. Gasoline price, against which petrol price has been benchmarked, has come down from USD 124 per barrel (that was taken into account for the hike implemented from today) to USD 117 a barrel.
But rupee has depreciated further against the US dollar - from Rs 53.17 to a dollar to Rs 56-level.Every dollar reduction in international oil price translates into a cut in product price by 33 paisa. But every time rupee depreciates against US dollar by rupee one, it translates into a requirement to raise prices by 77 paisa," Butola said. If the present trend continues for the remaining part of the current month, oil companies will cut petrol price by Rs 1.25 to 1.50 per litre, excluding sales tax or VAT.
"We are hoping that international oil prices will come down. If they come down and rupee does not depreciate, we will pass on the benefit to consumers," he said. "We will pass on the benefit as we had done on November 16 and December 1 after the November 4 petrol price hike". The oil companies had on November 4 hiked petrol price by Rs 1.80 per litre but followed it up with two successive cuts in rates - Rs 2.22 a litre on November 16 and Rs 0.78 per litre on December 1.
"We are committed to passing on any benefit we accrue as a result of prices coming down or rupee appreciating against dollar," he said. Asked if there will be any immediate rollback, Butola said, "There is no proposal before us. There is no situation (for rollback) now. No section (of our stakeholders) has asked us to reduce prices". Hindustan Petroleum Corp Ltd (HPCL) Chairman and Managing Director S Roy Chowdhry said "nobody has instructed us to do so".