Petrol prices may start changing daily

Soon, petrol price could move daily just like in the US, Europe and Brazil. The oil ministry is pushing state-run fuel retailers to revise the price every day in tune with international rates and the rupee's value against the greenback. Top government sources said the idea is being discussed at the top level of the ministry and the brass of fuel retail companies. IndianOil Corporation, the country's largest fuel retailer, has been tasked to draw up a note on the concept.

Admittedly, it is early days. "The idea is very much on the high table. But a formal proposal is yet to be drawn up," a ministry source said in response to TOI's query. Fuel retailers review petrol price on the 15th and last day of each month. The price is decided on the basis of average regional bulk market price of gasoline — trade name for petrol — and the rupee's value against the dollar in the preceding fortnight.

The ministry is pushing the idea of a daily revision with the aim of sidestepping the political flak that it draws every time petrol price is raised.  A daily price revision, as the thinking in the ministry goes, would make it easier to raise the pump price if the situation calls for it. While a reduction has never been an issue, an upward revision always needs a political clearance. Experience shows that such a clearance always has to overcome hurdles ranging from impending polls — even bypolls — to sulking allies. Also Read: Petrol prices may reduce by Rs 4

In the process, the quantum of the required increase in pump price keeps piling up along with the losses of fuel retailers as the ministry delays nod for an increase. A case in point is the May 23 revision, when retailers had to raise petrol price by Rs 7.50 a litre, the steepest-ever hike that came after a gap of months.

A daily price revision would make changes more acceptable to consumers as it would be in small doses. It would also allow retailers to pass on the benefit of lower international prices quickly without the fear of getting stuck in case of a rebound in global rates.

But the retailers are not too enthusiastic at the moment. One, they say a daily revision could be by a few paise only at times and create accounting nightmare. Two, the spread of the market, transportation and connectivity in India - especially the hinterlands and far-flung areas — are not the same as in the US. Perhaps, a weekly revision would probably be a more practical way to start, an executive said.