petrol prices are unlikely to be reduced even though there existed a scope for cutting rates by Rs 1.50-1.60 a litre. A day after BJP-led NDA and the Left parties called a Bharat Bandh or a nationwide street protests against petrol price hike, the government appeared in no mood to hand out a political advantage to the opposition by reducing rates.
"To my mind, there will be no revision in rates tonight (May 31)," a senior official at one of the three state-run fuel retailers said. There is a likelihood that petrol prices may now be revised tomorrow (Jun 1).
Indian Oil, Hindustan Petroleum and Bharat Petroleum had over the past one week indicated of a scope of reducing rates from June 1. The three firms, as per practice, were to revise rates of petrol today based on average international oil price and rupee-US dollar exchange rate in the previous fortnight. With international gasoline rates, against which petrol is benchmarked, falling to USD 114-115 from USD 124 (that was taken into account for the steep Rs 7.54 a litre hike effected from May 24), there existed a scope for reducing prices by Rs 1.50-1.60 a litre.
"If they (oil companies) would have reduced rates today, the Opposition would have gone to town claiming that their Bharat Bandh was successful which forced the government to cut prices," an industry official said.
Sources said the oil companies may take a call tomorrow on the quantum of reduction considering that rupee has depreciated further against the US dollar - from Rs 53.17 to a dollar to Rs 55.30.
Rupee depreciation raises the cost of imports. Every dollar fall in oil price should translate into a cut in product price by 33 paisa. But every time rupee depreciates against US dollar by Re one, it translates into a requirement to raise prices by 77 paisa.