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It will be a mixed Diwali for consumers of auto fuel, with the public sector oil marketing companies on Thursday reducing petrol prices by Rs 1.15 a litre and increasing diesel prices by 50 paise a litre both effective midnight of Thursday.
These revisions are excluding State levies. The actual change would vary from State-to-State based on local taxes.
Prices for petrol were last reduced on October 1 by Rs 3.05 a litre (excluding State taxes) on account of softening of prices in international markets as well as strengthening of the rupee.
“Since the last price change, international prices of petrol have declined marginally from about $113 a barrel to about $112 a barrel. The rupee to dollar exchange rate has appreciated from around Rs 63 to around Rs 62 for dollar, Both these factors have resulted in a reduction in prices of petrol, the benefit of which is being passed on to the consumer,” Indian Oil Corporation said in a statement.
In January, the Government had allowed the public sector oil marketing companies to increase the retail selling price of diesel within a small range every month to bridge the gap between retail price and market cost, commonly known as under-recoveries.
Currently, the companies are selling diesel at a loss of Rs 10.24 a litre. After the latest hike, under recovery on diesel will be at Rs 9.58 a litre.
“The movement of prices in the 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,” Indian Oil Corporation added.
Parikh report
The Kirit Parikh expert group on pricing methodology of diesel, domestic LPG and PDS kerosene, in its report submitted to the Ministry for Petroleum & Natural Gas on Wednesday has proposed to hike the price of diesel, domestic LPG and PDS kerosene.
The panel has suggested that diesel prices be increased by Rs 5/litre, subsidised domestic LPG by Rs 250/cylinder, and kerosene being sold under the public distribution system by Rs 4/litre immediately, as well as subsequent phase-out of subsidy on all these products.
The Finance Ministry has given its dissent on the report, as it did not agree with the existing pricing mechanism based on trade parity. The refinery gate price of diesel since 2006 is based on trade parity pricing – 80 per cent of import parity price and 20 per cent of export parity price.
Import parity price represents the price that importers would pay in case of actual import of the product at the respective India ports, while export parity price is the price that oil companies would realise on export of petroleum products.
The Finance Ministry was in favour of export parity pricing.
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