Petrol price cut delayed due to rupee depreciation

NEW DELHI: The wait for a petrol price cut just got longer. The rupee’s continued fall against the greenback — hitting 57.37 intra-day and closing at 57.12 to a dollar on Friday — has wiped off much of the scope for a reduction and pushed state-run oil marketing companies to watch the situation for a few more days.

“The oil companies are fully cognizant of facts. They are watching the volatility (in rupee and global oil prices). They will take a decision very soon,” oil minister S Jaipal Reddy said on Friday.

Pump price of petrol is set in accordance to its price in the global bulk market in Singapore. The price of motor spirit/gasoline — trade name for petrol — hasn’t come down in proportion to fall in crude. Oil prices dipped below $90 a barrel on Thursday, the lowest since December, 2010.

Oil marketing company executives said gasoline cracks, or the difference between cost of crude and the price of petrol, narrowed to just $3 a barrel. In comparison, cracks for diesel were as high as $12- $13 per barrel. Gasoline rates have fallen to $106.9 per barrel since the last reduction. But the rupee has devalued to Rs 55.69 to a dollar from Rs 54.96 in the first fortnight of June.

The rupee’s continued instability has made oil marketers wary of reducing the price yet. Already crude showed signs of a rebound on Friday and is expected to climb further towards month-end as traders correct their positions and Iran issue nears.

The executives fear that in the surcharged political atmosphere of the presidential election they would not get government permission to raise petrol price quickly again and crude-rupee situation worsen subsequently.

Oil firms had last cut petrol price by Rs 2 a litre with effect from June 3. The cut came after a hike of Rs 7.54 a litre last month, the steepest-ever .

Fuel price rise under CCI lens?

AHMEDABAD: Competition Commission of India (CCI) on Friday said it has “taken a note” of alleged “action in unison” of public sector oil companies for controlling petrol prices even after prices in international markets fell. The PSU oil firms, which generally revise petrol rates on 1st and 16th of every month based on average import cost and forex rates of the previous fortnight, have skipped changing rates recently.