NEW DELHI: State-run oil marketing companies on Friday did not raise petrol price after the political leadership nudged them to wait for another fortnight to see the outcome of RBI’s steps to stem rupee fall.
The companies review prices on the 15th and 30th of every month. On Thursday, they however had to defer a decision to raise prices by 50-65 paise a litre in the absence of a word from the oil ministry.
The decision to defer the increase came soon after oil minister S Jaipal Reddy met finance minister Pranab Mukherjee on the impact of rupee’s slide. The consensus view was that the companies should wait and watch the outcome of the RBI’s steps to arrest the rupee’s slide. The companies are expected to take a call on raising petrol price on New Year.
On record, the companies are free to revise the price of petrol in line with the fuel’s bulk market price and global crude. But in practice, they don’t move without an informal nod from the ministry, the majority shareholder. A sinking rupee and the petrol’s rising price in the international bulk market has widened the dent in their bottom lines.
Sources said the ministry was weighing the impact of giving the companies the nod in the face of looming UP polls and ongoing Parliament session. The ministry may still go for it since the last two rounds of price reductions would have adequately demonstrated to the public the market-linked pricing of the fuel.
The oil companies had reduced prices twice on November 16 and December 1 following cooling off in the international bulk rates of petrol and the rupee holding steady – although at a much weaker level. Petrol price was cut by Rs 2.22 per litre, or 3.2%, on November 16 and by another 78 paise per litre from December 1.