Indian state refiners could cut retail prices of petrol by about one rupee a litre or 1.5 percent as softening Singapore spot petrol prices have offset the impact of a declining rupee, an industry source said.
The companies cut petrol prices by about 3.2 percent earlier this month, the first reduction in retail prices in nearly three years and the first since prices were decontrolled in June 2010. "As per current calculations, there is scope to cut the basic price of petrol by about 0.85 rupees a litre, including taxes it should be about one rupee. We have to see price movements in the next two days also before deciding the final impact," the official said on condition of anonymity.
Table on Indian fuel prices since 2000, see Refiners discuss prices every two weeks and so far in this fortnight, spot FOB petrol prices in Singapore have averaged $108.76 a barrel compared with $114.13 in the previous fortnight, according to Reuters calculations. Oil companies had earlier this month cut petrol prices considering the rupee average at 49.30 to a dollar, an Indian Oil Corp press release said. Since then, Reuters data shows the rupee has decline to an average 51.78.
India's three state fuel retailing giants, IOC, Hindustan Petroleum Corp and Bharat Petroleum Corp tend to move their prices in tandem. Petrol is nowhere near as widely used as diesel in India -- accounting for around 10 percent of fuel demand compared with about 40 percent for diesel -- but it is high-profile because it powers many of the cars owned by the growing middle class. Petrol has a 1.09 percent weighting in the inflation index and near double-digit consumer prices have provoked criticism of the government, which subsidises other fuels such as diesel and cooking gas. The widening price gap between petrol and diesel has slowed the growth of petrol consumption, which has recently fallen behind that of diesel.