Petrol prices likely to come down by Rs 2 a litre from Thursday

After an increase of Rs 1.82 per litre on petrol, reports suggest that state-run fuel retailers are set to reduce the petrol prices by Rs 2 a litre from Thursday.

According to sources, though the cut down cannot be termed as a rollback, it is the government that has suggested the reduction in the prices. Since decontrol, the oil marketing companies on record have been free to set the street price of petrol.

The sources further said that the slashing of the prices would be a political decision, adding that the concerns of the oil companies need to be addressed. Global oil prices fell sharply and if rates sustain and the rupee does not depreciate any further, a reduction in petrol prices (excluding taxes) is possible.

If the prices are brought down, it will be the first reduction in the fuel prices since June 2010 when it was unshackled from the control of the government.

The move is also expected to douse popular and political anger ahead of the winter session of Parliament, scheduled to begin from November 22. It must be noted, that the petrol prices have been hiked five times since December 2010.

The ministry started tracking movements in prices of crude and products in international markets as well as the rupee's exchange rate more closely after the November 3 price increase sparked a sharp public outcry and drew allegations of lack of transparency in the pricing mechanism.

"Gasoline (petrol) averaged $115.8 per barrel in November, as against the $121 per barrel price taken at the time of the Rs 1.80 per litre hike in petrol price. Also, the rupee has averaged Rs 49.20 per US dollar, which is less than the October average," a senior official in one of the three state-run oil marketing companies said.

"The reduction in oil price warrants a cut of Rs 1.86 per litre in the petrol price, excluding all taxes," he said, adding that retail prices may go down by about Rs 2 per litre.