Oil Marketing Companies (OMCs) would revise the price of petrol soon in view of the changes in the rupee exchange rate, international gasoline prices.
While, the rupee appreciated against the US dollar, gasoline rates (against which the domestic price of petrol is benchmarked) declined slightly giving OMCs some margins (on petrol). But gasoline rates moved up again in the last few days.
Media reports suggest that petrol price may be cut by as much as Re 1 per litre over the next few days. Petrol prices were last revised on Oct 27 when they were raised by 29 paise to Rs 68.19 per litre in Delhi following government raising the commission paid to petrol pump dealers.
It is learnt that the oil companies were making a margin of close to Rs 2 per litre, but considering the impact of rise in gasoline rate and appreciation in rupee, the net available margin may be just around Re 1 per litre.
In June 2010, the government deregulated petrol prices giving oil companies freedom to fix rates in line with the cost. However, prices have seldom moved in line with cost and oil companies buckled under political pressure to keep rates checked to help the government manage inflation.
IOC lost Rs 1,167 crore on selling petrol below cost during the first six months of current fiscal. And since the product is deregulated, there will be no subsidy support from the budget to cover these losses.
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