Petrol prices were slashed by Rs 2.02 with effect from Saturday midnight following a fall in international crude prices, according to oil companies and government officials.

State oil retailers including Indian Oil, Hindustan Petroleum Corp and Bharat Petroleum had earlier raised petrol prices by Rs 6.28 per litre excluding local taxes. In effect, it  was translated to a Rs 7.5 hike in most cities including the local taxes.

After the cut, the petrol prices were reduced by Rs. 2.02 including taxes. Now, the petrol prices in New Delhi will cost Rs.71.16 while in Mumbai it would be Rs.76.45 after a reduction of Rs.2.12.

In Kolkata, it has come down from Rs 77.88 to Rs 75.81, which is a reduction of Rs 2.07. In Chennai, it will be Rs 75.40, down by Rs 2.13.

Delhi chief Minister has announced a slash in VAT on the hiked prices of petrol. Once the proposal is passed on Monday, Petrol prices in Delhi is expected to go down and would cost Rs 70.24.

The decision to cut price was taken during a review meeting which is held on fortnightly basis. The government said the cut is not owing to the nationwide protests against the price hike, but because fall in international crude prices.

According to a statement from Indian Oil, the international oil prices have decreased quite significantly since the last pricing cycle but the (dollar-rupee) exchange rate has shown further deterioration.

"While Indian basket of crude has reduced from $113.08 a barrel to $106.68 barrel and MS international price has also declined from $124.42 barrel to $115.81 a barrel, the (dollar-rupee) exchange rate has deteriorated from Rs.53.17/$ to Rs.54.96/$, the statement said.

Moreover, the Oil Marketing Companies (OMC) is suffering heavy under-recoveries on the three sensitive products including diesel, kerosene and domestic LPG.

The last revision of petrol prices were done in June 2011. When compared with the last price change, current under-recovery on diesel has gone up from Rs 6.13 per litre to Rs 12.53 per litre, for kerosene from Rs 24.16 per litre to Rs 30.53 per litre and domestic LPG from Rs 331.13 per cylinder to Rs 396.00 per cylinder as on 1st June'12.

"At these rates, it is estimated that under-recovery on sale of sensitive products during 2012-13 shall be around Rs.96000 crore (Industry: Rs.181000 crore),"

Indian Oil said that the OMC's are closely monitoring the international MS prices and exchange rates in order to assess their potential impact on selling prices in future. The next review meeting will be held on June 16.

Last week, a nation-wide protest was held to oppose the hike in petrol prices.  The BJP-led National Democratic Alliance (NDA), the Shiv Sena, the Republican Party of India (RPI) and other political parties called for Bharat Bandh on Thursday (May 31) which halted the normal life of the people across the country. Even UPA allies like Trinamool Congress and DMK protested the hike.

City-wise revised petrol fares

City-wise revised petrol fares

(With inputs from IBNS)