The petrol price revision is expected by July-end, with three state-owned fuel retailers IOC, BPCL and HPCL deciding on Thursday to revise petrol price roughly once a month in line with global crude oil price movement.
Retailers will decide the price uniformly among themselves in close coordination for the first three months after petrol price was deregulated on June 25, which led to an immediate price rise of Rs 3.5 a litre in Delhi when global crude oil price was ruling at $77-78 a barrel. Crude currently costs around the same level in global markets. According to estimates, every rise or fall of $1 in crude oil price per barrel will lead to an impact of 35 paise on the retail price of a litre of petrol.
?The price of motor spirit (petrol) in future will be decided by OMCs themselves. For the present, the three OMCs have decided that revision should be uniform and in consultation,? IOC director (finance) SV Narasimhan said.
He was speaking to reporters here after consulting petroleum secretary S Sundareshan on the new pricing regime for petrol.
The next price revision is expected by end of July. ?This does not imply that prices will be revised regularly every month unless there is a sharp fluctuation in global global crude oil price,? he said. The price revision need not necessarily be on the first of every month. After three months, depending on the competition in the market for the freely priced fuel, state-owned retailers will decide whether they too should compete among themselves.
Sundareshan told reporters that he has been given to understand that even the petrol pricing regime of private sector companies may not be vastly different from that of government retailers. But it depends on the private retailers? commercial decision, the secretary said.
The government has not decided on the new burden sharing mechanism among the Centre, the upstream oil producers and downstream retailers to meet retailers? losses arising from selling other fuels below their cost.
?No decision has been taken for the whole year. It will be decided between the petroleum ministry and the finance ministry. There is plenty of time for that. However, for the first quarter of 2010-11, upstream companies will be making a contribution of of approximately Rs 6,000 crore,? Sundareshan said. Narasimhan said that IOC has an under-recovery of Rs 11,000 crore in the first quarter of 2010-11, at the fag end of which came the petrol deregulation.
Narasimhan said that since petrol has been fully deregulated, the decline in crude price will be fully passed on to the consumer and it shall not be used to cross-subsidise other fuel.