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Petrol price was on Monday cut by Re. 1 per litre, effective midnight tonight - the third reduction in rates in one month.

The price cut, which was made possible because of fall in international oil prices, excludes local sales tax or VAT.

After including VAT, the reduction in price of petrol in Delhi comes to Rs. 1.20 per litre and the fuel will cost Rs. 66.09 per litre from midnight tonight against Rs. 67.29.

However, there will be no change in diesel prices even though today was the appointed day for putting into effect the government decision to hike rates by 40-50 paise a litre.

Today’s cut in petrol price comes on the back of 85 paise a litre reduction in rates on April 2 and Rs. 2 a litre decrease effected on March 16. The March 16 cut after including VAT translated into a Rs. 2.40 a litre reduction at pumps. It was the steepest cut in nine months.

Petrol in Mumbai will cost Rs. 1.26 less at Rs. 72.88 per litre. In Chennai, the price has been cut by an equal measure to Rs. 69.08. It will cost Rs. 73.48 a litre in Kolkata from Tuesday against Rs. 74.72.

Announcing the reduction, Indian Oil Corp (IOC), the nation’s largest fuel retailer, said since the last price change international prices have declined from USD 119.23 per barrel to USD 116.61 a barrel. “Rupee-US dollar exchange rate has, however, deteriorated slightly from Rs. 54.28 to a US dollar to Rs. 54.51,” it said, adding it was decided to pass on the benefit of reduced oil prices to customers.

IOC, however, did not say why the rates of diesel, which as per the January decision of the government are to be hiked by 40-50 paise per litre every month till all of the losses on the fuel are eliminated, were not changed. The company said it is losing Rs. 6.48 a litre on diesel.

Oil firms calculate the desired retail price on 1st and 16th of every month based on average imported oil price on the previous fortnight.

The cut in petrol price follows two rounds of hike in rates since February. Petrol price was hiked by Rs 1.50 a litre on February 16 and then by Rs 1.40 per litre from March 2. Both the increases were excluding local VAT.

Although petrol prices had been deregulated in June 2010, they have rarely moved in tandem with cost. This resulted in Rs 500 crore loss to IOC (Rs 1,150 crore loss to state fuel retailers) during 2012-13.

However, since January, when the government decided to cut subsidises by asking oil firms to moderate prices in step with cost, petrol prices have moved in sync with cost.

Diesel prices continue to be regulated, but the government had in January authorised oil firms to hike the rates by 40-50 paise per litre every month till such time that the entire revenue loss on the fuel is completely wiped off.

Oil firms raised diesel prices by 50-51 paise per litre on three occasions since then.

IOC said in addition to losses on sale of petrol, oil firms are suffering under-recovery (revenue loss) on sale of diesel of Rs 6.48, kerosene of Rs 30.49 per litre and domestic LPG of Rs 433 per cylinder.

“The movement in international oil prices and rupee-USD exchange rate is being monitored and decision on future price changes shall be taken accordingly,” the IOC statement said.