Stepping up the move to deregulate petrol and diesel prices in the country, State-owned fuel retailers Indian Oil Corporation ltd (IOC), Bharat Petroleum Corporation ltd (BPCl) and Hindustan Petroleum Corporation ltd (HPCl) will launch a pilot project for daily price revision in five select cities from May 1 on a trial basis, and gradually it will be extended to all over the country if it is proved to be a success, according to sources.
When contacted IOC Chairman B Ashok said the project is to be launched in a month or so but did not give a specific schedule trial date. However, sources in an oil company said that the pilot is scheduled to be launched on May 1.
“A pilot project for daily revision of petrol and diesel price will be first implemented in Puducherry, Vizag in Andhra Pradesh, Udaipur in Rajasthan, Jamshedpur in Jharkhand, and Chandigarh, and ultimately, we will be driving towards market-linked rates on a daily basis at all pumps across the country,” said Ashok.
Public sector fuel retailers IOC, BPCl and HPCl own over 95 per cent of nearly 58,000 petrol pumps in the country.
At present, they revise rates on fortnight basis every month based on average global price of the fuel in the preceding fortnight and currency exchange rate.
Instead of using fortnightly average, pump rates will reflect daily movement in international oil prices and rupee-US dollar fluctuations. “It is technically possible to change rates daily, but we have to first do a pilot. Once pilot is done and its implications are studied, we will extend it to other parts of the country,” Ashok said.
Daily price change will remove the big leaps in rates that need to be effected at the end of the fortnight and consumer will be more aligned to market dynamics. While petrol price was freed from the Government control in June 2010, diesel rates were deregulated in October 2014. Technically, oil companies have freedom to revise rates but often they have been guided by political considerations.
Rates differ by only a few paise between pumps of the three State fuel retailers. Unbranded petrol at IOC pumps in Delhi costs Rs 66.29 per litre, while the same at BPCl pumps in the city is priced at Rs 66.37 a litre. HPCl pumps sell for Rs 66.48 per litre. While unbranded diesel at IOC pumps in Delhi costs Rs 55.61, Rs 55.66 at BPCl outlets and Rs 55.69 a litre at HPCl pumps.
“With daily changes, which are unlikely to more than few paise per litre, the political pressures for not revising rates particularly when they are to be hiked will go,” sources said.
Petrol price was last revised downward by Rs 3.77 a litre on April 1, and diesel rates were cut by Rs 2.91. This was the first revision in two-and-half-months as oil firms did not change prices during assembly elections in five states, including Uttar Pradesh and Punjab.
Ashok, however, said prices of petrol and diesel in a particular market (city or town) would be the same. “By and large, in a particular market it should be same. Though, there might be marginal difference from pump to pump,” he added.