Oil marketing companies (OMCs) may cut petrol and diesel prices by up to Rs 2 per litre. This comes as softening international crude as well as product rates retailers’ margins positive.
According to the CNBC Awaaz report, a reduction in oil prices by 40 paise is likely to occur daily for the next five days. That will bring a total reduction of Rs 2 in petrol and diesel prices in installments.
Politically, however, a substantial reduction may be preferred for the positive impact it will create in favour of the ruling dispensation ahead of elections in Himachal Pradesh and Gujarat, with the poll dates for the latter expected any day now.
A reduction in fuel prices will help tame inflation and blunt some of the opposition criticism over the high cost of living.
The softening oil prices on Tuesday prompted the government to reduce the windfall gains tax on crude from Rs 11,000 per tonne to Rs 9,500. In the same vein, export tax was raised on jet fuel from Rs 3.50 per litre to Rs 5 and on diesel from Rs 12 per litre to Rs 13 per litre as margins rose.
Note that the windfall tax is levied as a special additional excise duty which is aimed at absorbing the super-profits earned by domestic crude oil producers due to high global crude, product prices, and is revised every fortnight. The rates of the levies are being changed depending on crude prices and the refining spread. From $108 per barrel in March this year, crude oil prices have comes down to around $95 per barrel. On Wednesday, Oil prices rose after data showed a surprise drop in US crude stockpiles, suggesting demand is holding up despite steep interest rate hikes dampening global growth.
Benchmark Brent crude, which has a weightage of about 25 per cent in the Indian Basket – the mix of crude bought by Indian refiners, stood at $115 per barrel around the time excise duty was cut. The prices have since come down and are hovering around $95 after briefly dropping below $90 in September.
Meanwhile, OMCs like Indian Oil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation announced no change in petrol, and diesel prices on Wednesday.
Today, petrol and diesel in Delhi cost Rs 96.72 and Rs 89.62 a litre, respectively. In Mumbai, petrol is being sold for Rs 106.31 per litre and diesel for Rs 94.27. Petrol and diesel are priced at Rs 102.63 and Rs 94.24 in Chennai and at Rs 106.03 and Rs 92.76 in Kolkata, respectively.
Petrol and diesel prices across the country have remained unchanged for over five months now. Since late May this year, when Finance Minister Nirmala Sitharaman announced a cut in excise duties on petrol and diesel by Rs 8 per litre and Rs 6 per litre, respectively, OMCs have not revised the prices.
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