Petrol price dips below Rs 74 ... diesel wipes off entire hike

New Delhi: Petrol price Wednesday fell below Rs 74 per litre mark for the first time since April as the six-week long price reduction spree wiped off all of the massive price hikes witnessed in petrol and diesel rates earlier this year. Petrol price in Delhi was cut by 50 paisa to Rs 73.57 per litre, according to a price notification issued by state-owned fuel retailers. This is the lowest petrol price since April.

Diesel rates were cut by 40 paisa to Rs 68.89 a litre, the notification said. With this, the reduction in rates in last six weeks totals Rs 9.26 per litre on petrol and Rs 7.2 per litre on diesel. Rates have been on the decline since October 18. This has wiped off all of the price hike on petrol and diesel in two months beginning August 16.

Petrol price had touched a record high of Rs 84 per litre in Delhi and Rs 91.34 in Mumbai on October 4. Diesel on that day had peaked to an all-time high of Rs 75.45 a litre in Delhi and Rs 80.10 in Mumbai. Prices had started to climb from August 16. Petrol in Delhi was priced at Rs 77.14 per litre and in Mumbai it cost Rs 84.58 on August 15. Diesel on that day was priced at Rs 68.72 per litre in Delhi and at Rs 72.96 in Mumbai.

Petrol price in Mumbai Wednesday stood at Rs 79.12 per litre and diesel was priced at Rs 71.71. Between August 16 and October 4, petrol price was hiked by Rs 6.86 per litre and diesel by Rs 6.73.

On October 4, the government decided to cut excise duty on petrol and diesel by Rs 1.50 per litre each and asked state-owned fuel retailers to subsidise prices by another Re 1 a litre by reducing their margins. Many states including Maharashtra matched that with a reduction in local sales tax or VAT.

Subsequent to this, the petrol price came down to Rs 81.50 per litre in Delhi and diesel to Rs 72.95 a litre on October 5. In Mumbai rates fell to Rs 86.97 per litre for petrol and Rs 77.45 in case of diesel.

As the international oil prices continued to rise, price of petrol and diesel in Delhi increased to Rs 82.83 and Rs 75.69 on October 17. In Mumbai, rates touched Rs 88.29 a litre for petrol and Rs 79.35 for diesel.

But since then, international oil prices have been falling and rupee has also appreciated, resulting in decline in retail rates. With international oil prices declining to USD 60 per barrel, retail prices of petrol and diesel may reign easy in the next few days.

The retail selling price of petrol and diesel is dependent on the international prices of benchmark fuel and the rupee-US dollar exchange rate. This is because a large proportion of country's requirement is met through imports.

On Tuesday, Niti Aayog CEO Amitabh Kant stressed on tough steps to reform the power sector and pitched for a ban on the use of fossil fuel-based gensets, saying that the Government needs to do it before a court order six months down the line. He also made case for phasing out more than 25 year old coal based thermal power plants, creating of open access power market, commercial coal mining and promoting renewables.

"You need to prohibit use and sale of gensets including captive which are using petrol, diesel, kerosene, pet coke and furnace oil for power supply. This is polluting and brings inefficiency in power sector. ...Whether we like it or not, if government does not do it, six months down the line courts will do that," Kant said.

Kant further noted that, if the government bans generator sets (gensets), the strengthening distribution system would be required to ensure round-the-clock power supply and said "we need to do heavy penalty for load shedding. This require series of tough measure."

In the proposed Electricity Amendment Bill, consumer would be able to switch service providers in electricity sector like they do for telecom services. On the issue to safeguard new investments in power sector, he said, "We clearly need to phase out plants which are more than 25 years old. NTPC, BHEL and some others may not like it but this is necessary".

Strongly recommending privatisation of coal mining, he said,"all this theories of nationalisation coal mines is not worth" and said that government should allow private sector to step in for commercial mining. Earlier, the Union Cabinet had approved commercial mining in view of coal shortage in the country which is also plaguing power sector.

On the performance of states under UDAY scheme he said, "Power produced must be sold at the right price". While some states like Andhra Pradesh, Gujarat, Maharashtra and Himachal Pradesh have done well. There are other states which have done very badly. Jharkhand, Tamil Nadu, Telangana, Uttarakhand, Jammu & Kashmir and Meghalaya have done extremely poorly.