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- Mar 8, 2024
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Consumers can look forward to a reduction of more than Re 1 in petrol price by the end of this month, given the trend in the international price of crude and motor spirit - the trade name for petrol - in the Singapore bulk market.
If that happens, the government may try to take credit for the reduction to placate allies such as Trinamool Congress and the Samajwadi Party and the DMK who have sought a rollback. But what may appear as a concession to them will actually be based on hard numbers.
Indeed, government sources said the reduction is already factored in by the state-run oil marketers. "Unless there's any more dramatic fall in the rupee's value against the dollar, a reduction of Rs 1 or Rs 1.50 per litre is quite certain. After adding taxes, the actual reduction at pumps would be around Rs 2 a litre. This will restrict the hike at Rs 5 - the same as the highest quantum affected before Wednesday's revision," one source said.
This is how it works: Petrol price in India is benchmarked to a weighted mix of crude and motor spirit prices in Singapore. The oil marketers have based Wednesday's hike taking the first fortnight's average price of $109 per barrel for crude and $124 a barrel for motor spirit in Singapore.
These numbers have already come down. The mix of crude that the state refiners import is down at $106 a barrel. Similarly, motor spirit slid to $116 a barrel on Tuesday. If Wednesday's close of $91/barrel for the benchmark Brent crude - a seven-month low - is any indication to go by, the prices will head south further in the remaining days in the current fortnight.
The sources said the increase was well orchestrated. Oil companies usually review prices on the 15th and last day of each month. The deviation on Wednesday was to organize political alibi for oil minister S Jaipal Reddy who is away in Turkmenistan. Reddy is learnt to have given the go ahead for raising the price before leaving. His absence gave the government an opportunity to distance and argue that it had no role to play since petrol is a deregulated fuel.
The same script will be continued, but with a variation. Reddy will be in Delhi whenever the reduction takes place and this time the government will not distance from the succour - so much for petrol being an decontrolled product.
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