A day after hurling the "petrol bomb" at the public, a worried United Progressive Alliance (UPA) government on Thursday fielded chief executives of state-owned oil companies to explain the compulsions for the steepest-ever hike in petrol price indicating that it may be cut by Rs 1.50-1.80 early next month if the current trend of softening in international oil prices continues.

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The chairman of India's biggest refiner, the Indian Oil Corporation (IOC), R.S. Butola said that the company may cut petrol prices if global crude prices drop. However, when asked that will there be any immediate rollback, he said, "There is no proposal before us. There is no situation (for rollback) now. No section (of our stakeholders) has asked us to reduce prices."

S. Roy Chowdhry, chairman and managing director (CMD), Hindustan Petroleum Corp Ltd (HPCL), commented in similar vein: "Nobody has instructed us to do so." Butola said that IOC will review petrol prices again in early June. "Current trend (in international prices) indicates that prices (of petrol) can come down."

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"Gasoline prices, against which petrol price has been benchmarked, has come down from $124 per barrel (that was taken into account for the hike implemented from today) to $117 a barrel. But the rupee has depreciated further against the US dollar- from Rs 53.17 to Rs 56-level. Every dollar reduction in global oil rate translates into a cut in product price by 33 paise. But every time rupee depreciates against the dollar by rupee one, it translates into a requirement to raise prices by 77 paise," Butola explained.

"If the present trend continues for the remaining part of the current month, oil companies will cut petrol price by Rs 1.25 to Rs 1.50 per litre excluding sales tax or VAT. We are hoping that international oil prices will come down. If they come down and the rupee does not depreciate, we will pass on the benefit to consumers. We will pass on the benefit as we had done on November 16 and December 1 after the November 4 petrol price hike."

The oil companies had on November 4 increased the petrol price by Rs 1.80 per litre but followed it up with two successive cuts - Rs 2.22 on November 16 and Rs 0.78 per on December 1. Making it difficult for car manufacturers to sell their petrol vehicles, Hyundai on Thursday announced Petrol Price Lock Assurance to insulate customers from price hike.

Meanwhile, Society of Indian Automobile Manufacturers (Siam) has asked the government to consider hiking the price of diesel. "Siam requests the government to reconsider its proposal for such a steep increase in the price of petrol and to seriously consider the option of a moderate increase in the price of diesel before it impacts the growth of the industry," the automobile association said.

The proportion of diesel cars sold is expected to increase to 42-43 per cent in 2012-13 from 39 to 40 per cent in 2011-12. Credit rating agency Crisil said that oil retailers will lose up to Rs 1,700 crore annually for every Rs 1 reduction in petrol prices and would incur annual losses of Rs 1600-Rs 1700 for every Rs 1 per litre rolled back.
Courtesy: Mail Today