Oil Marketing Companies slashed Petrol Prices by 2.02 Rupees

The state-run oil marketing companies on 2 June 2012 announced to slash the petrol prices by 2.02 rupees a litre. The decision came in the wake of global fall in crude prices. The reduction took effect from past midnight 2 June 2012. The decision to cut the prices came following a fortnightly review meeting of the oil companies.

The current reduction in petrol prices means now it will cost 71.16 rupees in Delhi, 76.45 rupees in Mumbai, 75.81 rupees in Kolkata, 75.40 rupees in Chennai. The next revision in petrol prices is due on 16 June 2012.

All the state owned oil marketing companies on 24 May 2012 had raised the petrol prices by 7.54 rupees a litre, citing massive loss incurred by them as the reason. The 7.54 rupees hike was steepest in the history of the country, which subsequently created lots of public fury. Political parties across the country also called a bandh on 31 May 2012 in the protest of jacked up petrol prices.

The 7.54 rupees increase was based on an average gasoline price of 124.37 rupees a barrel and the rupee-dollar exchange rate of 53.17 rupees in the first fortnight of May. However, the gasoline price has since then dipped to 115.77 dollar in the second fortnight, but the exchange rate has worsened to 54.96 rupees.

IOC (Indian Oil Corporation), BPCL (Bharat Petroleum Ltd) and HPCL (Hindustan Petroleum Limited) are three government-run oil marketing companies which have consistently been crying hoarse over their mounting loss figure. The three companies had recorded the collective loss of 138541 crore rupees in revenue during the fiscal year 2011-12. Their loss in the fiscal year 2012-13 is expected to touch the figure of 193880 crore rupees.

Petrol prices in 2011-12, were revised five times in order to bring domestic prices in line with those in the international market. The rates were raised on three occasions and lowered on two.

To moderate the loss incurred by the oil marketing companies and establish a sustainable system for the pricing of petroleum products the union government of India had constituted a committee headed by Kirit Parekh. The panel had suggested to deregulate the petrol prices and let the oil marketing companies determine the petrol prices as per the international prices. Following the recommendations of the expert panel the government on 25 June 2012 had finally arrived on a decision to deregulate the petrol prices and make it market-determined.