Petrol price, which were last cut by 90 paise (Rs 1.09 a litre after including local sales tax) on August 1, will be further reduced by Rs 1.81 per litre.
After including local sales tax or VAT, the reduction in Delhi comes to Rs 2.18 per litre. Petrol from August 15 here will cost Rs 70.33 a litre as compared to Rs 72.51 currently.
The reduction would vary from Rs 1.89 to Rs 2.38 per litre in different cities depending on local levies, according to Indian Oil Corp, the nation's largest oil firm.
This is the steepest cut in rates since October 1 when petrol price was cut by Rs 3.05 per litre, excluding VAT (Rs 3.66 per litre in Delhi after including VAT).
In perhaps the first instance of a minister announcing the reduction in price of a petrol which was deregulated or freed from government control in June 2010, Oil Minister Dharmendra Pradhan took to his twitter account to say that the fuel price will be cut from midnight of August 14/15.
"Price of Petrol will be reduced from midnight of 14/15 August 2014 in the range of Rs 1.89-2.38 (Rs 2.18/litre at Delhi)," he tweeted.
Pradhan made the announcement more than 31 hours before the price cut is to be implemented.
Till now, state-owned oil firms announced the price revision only on the eve of the change being effected.
If a reduction is announced well in advance, petrol pump owners will refuse to take supplies from oil companies till the new rates are effected, thereby risking pumps going dry. They stand to lose money if they buy petrol from oil firms today or tomorrow and sell at lower rates from August 15.
In case of a price hike, the opposite happens with petrol pumps hoarding all supplies and displaying no stock boards in order to get higher rates for supplies they procured at lower price.
Yesterday, IOC Chairman B Ashok had indicated of a price cut on the Independence Day because of softening in international rates.
"Petrol is a decontrolled product and prices increase or decrease depending on input cost every fortnight. We had cut rates on August 1 and will be reviewing prices on August 15," he had said.
State retailers revise petrol price on 1st and 16th of every month based on average international oil price and rupee-dollar exchange rate in the previous fortnight.
"There are some positive indications," he said when asked if there is likelihood of a price cut going by the average of oil price and exchange rate so far.
Oil firms had last cut rates on August 1 by Rs 1.09 per litre, the first reduction in price since mid-April.
The government had in June 2010 freed petrol prices and since then rates have moved in tandem with the cost on most occasions.
For diesel, the government had in January 2013 decided to eliminate the subsidy in stages through monthly increases in prices by up to 50 paise per litre.
With monthly increases continuing, subsidy or losses on diesel have been trimmed to Rs 1.33 per litre but this will go up as there is a marginal increase in international gasoil (diesel) prices.
Diesel price revision is due only on September 1 as per the policy of raising rates every month.