OREANDA-NEWS. January 23, 2012. MS prices have been decontrolled by the Govt of India wef 25.06.10 and since then the Oil Marketing Companies (OMCs) are free to fix the selling price of petrol. OMCs are reviewing MS prices on fortnightly basis.

In accordance with the available Govt mandate & the movement of international oil prices as well as the INR-USD exchange rate, petrol prices have been revised 4 times during current year. The last revision undertaken w.e.f. 16.11.11 was a reduction in price of Rs.1.85/litre (excluding state levies).

Review of international oil prices & INR-USD exchange rate of relevant fortnight for prices effective 01.12.11 brings out a further downtrend in international oil prices and a further weakening of the exchange rate. Thus, while MS international prices have moved down significantly from USD 116/bbl approx. to USD 109/bbl approx., the exchange rate has deteriorated from Rs.49.32/USD to Rs.51.50/USD. The combined impact of the two factors is an over-recovery of Rs.0.65/litre. It has, therefore, been decided to revise the MS prices downward by Rs.0.65 / litre (excluding state levies) w.e.f. 1st Dec, 2011.

However, current trend is of increasing international MS prices & further deterioration of exchange rate. These developments are being monitored closely and will impact the direction of prices in the next pricing cycle.

While international price of MS has declined during period under review, international prices of the three sensitive products, namely HSD, SKO (PDS) and LPG (Dom), have shown a sharp uptrend consequently having a further adverse impact on under-recovery on sales of these products w.e.f. 1st Dec, 2011. The under-recovery on HSD has gone up from Rs 10.17/litre to Rs.12.03/litre, for SKO(PDS) from Rs.25.66/litre to Rs.28.56/litre and for LPG(Dom) from Rs.260.50/cylinder to Rs.286.50/cylinder. The increase in under-recovery on sensitive products would increase the per day under-recovery of OMCs from Rs.348 crore/day during the fortnight of 16-30.11.11 to Rs.452 crore/day wef 1st Dec, 2011, with the overall under-recovery projection of OMCs during 2011-12 crossing Rs.135000 crore.