Petrol price rollback in the offing: report

India's three state-run oil marketing companies may cut petrol prices from 16 November, according to a Reuter news agency report on Friday citing an unnamed industry source. The cut could be of least 60 paise a litre, or about 1 per cent, the report said.

If the rollback in last week's petrol price hike is effected, it would be the first cut in nearly three years, and the first in the 18 months since the government ended controls on petrol pricing. The prices have been raised 13 times in those 18 months, and the last hike caused a political uproar, even amid partners of the ruling UPA government, particularly the Trinamool Congress.

Softening Singapore prices have partially offset the impact of a declining rupee to offer a small window of opportunity for a cut. "If the rupee continues at current levels and if Singapore FOB (free on board) gasoline spot prices continue to average $115.80 a barrel, oil companies may reduce basic prices by at least 60 paise a litre," the source said.

Last week the oil retailers raised gasoline prices by Rs1.50 a litre; and with state taxes added, prices at pumps rose Rs1.80 in Delhi and almost Rs2 in Maharashtra, a state whose government is notorious for its swingeing taxation regime.

Petrol is nowhere near as widely used as diesel in India, accounting for just around 10 per cent of fuel demand compared with about 40 per cent for the heavily subsidised diesel. Nonetheless, any hike in fuel prices tends to cause a political uproar.

In the case of petrol, there is a valid argument that it hits the middle class the hardest, as they use petrol-driven two-wheelers as family transport. The upper class, meanwhile, is increasingly switching to diesel-powered cars to take advantage of the artificial price difference between the two fuels.

Petrol currently retails for around Rs68.6 per litre, nearly 68 per cent higher than diesel.