Petrol will cost at least Re 1 less from April 16

Naik will also have to decide whether prices of the two products, minus local taxes, should continue to remain uniform throughout the country or be cheaper at coastal areas compared to inland locations.

It is understood that petrol price cut may vary between Rs 1 to Rs 1.50, depending on the location of cities.

A committee of oil industry officials, which met today in Mumbai, has advocated the differential pricing system to bring about ‘true’ import parity pricing system approved by the Cabinet in 1997.

Under that pricing formula, petrol and diesel sold at coastal regions will be charged a price equal to global prices while the hinterland areas will be charged a price equal to global prices while the hinterland areas will be charged a global parity price plus transportation cost.

A meeting between ministry and industry officials is scheduled for tomorrow to decide both price and pricing issues.

Sources said that the industry has favoured a cut of one rupee per litre in inland areas and Rs 1.50 per litre in coastal areas. Currently, coastal prices are higher than inland cities and towns.

Sources said that a reduction has become necessary since the Indian basket of crude averaged $27 a barrel in the second fortnight of March and fell to $25.09 a barrel in the subsequent fortnight.

Though the crude decline started immediately after the United States attacked Iraq on March 20, oil companies did not lower prices on April 1 in an attempt to partially recover revenue losses incurred when they did not increase prices in line with the international surge.

Petrol prices have risen by more than a quarter in 2002-03, from Rs 26.54 a litre (in Delhi) on April 1, 2002 to Rs 33.49 per litre currently. Diesel prices have gone up by one-third to Rs 22.12 per litre from Rs 16.59 a litre on April 1, 2002.