Retail selling price for petrol and diesel will change daily, based on the oil prices in international markets and variation in foreign exchange rates
In April this year, state-owned oil companies like Indian Oil Corporation (IOC), Bharat Petrol Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) unanimously announced, that as a pilot project, their fuel sold through outlets in Chandigarh, Vizag, Puducherry, Udaipur and Jamshedpur will have dynamic pricing which will change on a daily basis from May 1. After just a month of running the project, the companies have now announced that the same mantra will be implemented nationwide from June 16, 2017. That directly impacts all the 58,000 fuel stations owned by these three corporations.
Per litre rates of petrol and diesel will fluctuate daily as they will be directly linked to the oil prices in international markets and variation in foreign exchange rates between US Dollar (USD) and Indian National Rupee (INR). The prices will vary from city to city as well as from petrol pump to petrol pump. All three state-owned companies will follow a marginally different pricing.
The earlier practice was a change in fuel prices once every fifteen days - on the 1st and 16th of every month. The prices fluctuated on the basis of average international price of the fuel in the preceding fortnight and currency exchange rates. However, the new norm of dynamic pricing will eradicate the monumental changes in per litre costs, which rarely stayed below Rs 1 per litre. While it will create more transparency between the retailer and the consumer, it will also help the consumers align themselves with market dynamics.
Petrol price was freed from the government’s control in 2010 and diesel rates were deregulated in October 2014. This equates to a complete freedom for fuel companies to revise the RSPs, but they are often guided by political considerations.
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