Close on heels of the steepest ever hike, petrol prices may be cut by Rs 1.50-1.80 early next month if current trend of softening in international oil prices continues, oil companies indicated today.
Worried over the political backlash, the government fielded chief executives of the state-owned oil companies to explain the compulsions that led to the Rs 7.54 a litre increase in petrol price, the third in a year but the first in almost seven months.
"Current trend (in international prices) indicates that prices (of petrol) can come down," IOC Chairman R S Butola told reporters here.
CPI (M) supporters protest the hike
Oil companies revise petrol prices on 1st and 16th of every month on the basis of average international oil price and the foreign exchange rate in the previous fortnight. Gasoline price, against which petrol price has been benchmarked, has come down from USD 124 per barrel (that was taken into account for the hike implemented from today) to USD 117 a barrel. But rupee has depreciated further against the US dollar - from Rs 53.17 to a dollar to Rs 56-level.
"Every dollar reduction in international oil price translates into a cut in product price by 33 paisa. But every time rupee depreciates against US dollar by rupee one, it translates into a requirement to raise prices by 77 paisa," Butola said.
If the present trend continues for the remaining part of the current month, oil companies will cut petrol price by Rs 1.25 to 1.50 per litre, excluding sales tax or VAT.
"We are hoping that international oil prices will come down. If they come down and rupee does not depreciate, we will pass on the benefit to consumers," he said. "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 hiked petrol price by Rs 1.80 per litre but followed it up with two successive cuts in rates - Rs 2.22 a litre on November 16 and Rs 0.78 per litre on December 1.
Amid growing street protest and unease in the party over the steep hike in petrol prices, Congress today hinted at a partial rollback as Oil Minister S Jaipal Reddy cut short his Turkeministan visit and met Sonia Gandhi's political secretary Ahmed Patel.
AICC spokesperson Manish Tewari said the party was hopeful that some kind of a modus vivendi involving the central government, state government and oil companies will be arrived at. "We are hopeful that the government would find a way out so that some of this burden is eased," he told reporters.
His statement came amid the unease in the party over the hike, which has been slammed by even UPA constituents, as a number of Congress leaders, speaking on condition of anonymity, said the decision would harm the party.