New Delhi: Diesel price is likely to be cut by about Re 1 per liter, the first reduction in rates in more than five years, while the price of gasoline can be reduced by Rs 1.75.
State oil companies is likely to announce a reduction in rates, made possible by softening international oil rates this afternoon, government and industry sources said.
Sub-recovery or the difference between the sale price and the cost of imports was wiped out and had a recovery over 35 paise per liter from September 16.-This recovery more now about Re 1 liter.
While the government had resisted the temptation to cut rates then prices tend to be reduced to fortnightly review due on Tuesday.
Sources said the oil ministry is of the view that although the Cabinet Committee on Political Affairs (CCPA) had on January 17, 2013 allowed a monthly increase in the price of diesel from 40 to 50 paise per month to end with low recovery was not 't expected that recovery would not be excessive.
It wants to reduce the price of diesel to protect its market share of state-owned oil companies, which can be lost to private retailers would be selling diesel at par with international prices.
It is believed that Oil Minister Dharmendra Pradhan has already written to the Prime Minister Narendra Modi in the emerging scenario. In addition, he has written to the Election Commission seeking consent to the decline in prices in view of assembly elections in the state of Maharashtra and Haryana.
This would be the first reduction in rates of diesel in more than five years. Diesel rates were last cut on January 29, 2009, when it fell by Rs 2 liter of Rs 30.86.
Since then they have only increased rates of international oil prices rose. Since January 2013, diesel prices were raised by 50 paise to one liter per month to eliminate under-recoveries.
Like the diesel, the state oil companies had not changed the rates of petrol on September 16 despite which justifies an increase of 54 paise as their benchmark rates of gasoline had resulted in the international market.
This is perhaps the first time that retail prices in India are higher than global rates.
Oil companies calculate the retail price for desired retail gasoline and diesel in 1 and 16 of each month, the reference price and the rupee-dollar exchange rate international average.
The next revision of the prices of diesel and petrol is due today.
Originally, the prices of petrol and diesel were liberalized in April 2002 when the NDA government was in power. Regime of administered prices, however, made an entry through the back door towards the end of the regime of NDA in the first quarter of 2004, when oil prices began inching upward.
Congress-led UPA controlled rates as international oil prices soared. In June 2010, however, he is freed petrol prices from its control and rates since they moved more or less in line with the cost.
In January 2013, the UPA decided to deregulate diesel prices in stages by 50 paise one liter monthly increases. The rates were raised last August 31 after losses have been annihilated.
Rates have increased cumulatively by Rs 11.81 per liter in 19 installments from January 2013.
