Owing to the recent rise in the international petrol price and depreciation of rupee, the marketing margin of Oil marketing companies (OMCs) on every litre of petrol declined considerably.
During the second fortnight of November, the average international price rose to $118.64 a barrel from $113.74 a barrel in the first fortnight. The dollar-rupee exchange has moved from Rs 54.24 to Rs 55.21 between the two periods.
Reports suggest that, the margins, which was over Rs 2 a litre, declined to near-negligible in the current fortnight, though they were healthy even after the companies took a price cut of Rs 0.95 a litre on November 15. OMCs review petrol prices in tune with the international price on a fortnightly basis.
Every dollar decline in global petrol improves margins by Rs 0.34 on every litre of petrol; every Rs 1 strengthening against the dollar has a positive impact of Rs 0.74 on a litre. Accordingly, the refinery transfer price or the price paid by OMCs to refineries for petrol increased from Rs 39.65 in the first fortnight to Rs 42.11 a litre in the next.
Petrol was decontrolled in June 2010 but the government-owned OMCs failed to pass on regular desired increases, owing to political pressure.
Consequently, they have not made any profit on petrol in the two financial years following the decontrol. The trend does not look different in the current year, too.
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