NEW DELHI (Reuters) ? State-run retailers may cut gasoline prices by about one percent or at least 0.60 rupees a litre excluding taxes from Nov. 16 as softening Singapore prices have partially offset the impact of a declining rupee, an industry source said on Friday.
It would be the first decrease since June 2010 when the Congress-led government freed petrol prices. A series of hikes since then have drawn criticism from political allies and stirred public outcry amid high inflation.
"If the rupee continues at current levels and if Singapore FOB (free on board) gasoline spot prices continue to average $115.80 a barrel, oil companies may reduce basic prices by at least 60 paise a litre," the source, who requested anonymity, told Reuters.
Last week state-run Indian oil retailers raised gasoline prices by 1.50 rupees a litre, which rose to 1.80 rupees a litre after adding local taxes in Delhi. It was the fourth increase in gasoline prices this year.
Petrol is nowhere near as widely used as diesel in India -- accounting for around 10 percent of fuel demand compared with about 40 percent for diesel -- but it is high-profile as it powers many of the cars owned by the growing and vociferous middle class.
In addition, many Indians use petrol-driven scooters for commuting while families of four all on a bike are a common sight.
The widening price gap between the two fuels has softened growth of petrol consumption, which has recently slowed behind that of diesel.
Petrol currently retails around 68.6 rupees ($1.37) per litre, nearly 68 percent higher than diesel.
Last week's price rise was made assuming Asian gasoline prices of about $121 a barrel and an exchange rate of 49.20 rupees to the dollar.
Spot Singapore gasoline prices are currently averaging $115.80 a barrel according to Reuters data while the rupee averaged about 49.30 to the dollar in the fortnight to Friday.
Indian fuel retailers usually meet once a fortnight to consider petrol prices but prefer to wait for a considerable change before passing on to the retail level.
Their profitability has been hurt as the government has not raised prices of subsidised fuels -- gasoil, kerosene, and cooking gas -- since June this year despite rising global crude oil prices .
The oil firms are likely to suffer a revenue loss of 1.32 trillion rupees on their sales of subsidised fuels in the current fiscal year ending March 31, 2012.
The finance minstry on Friday agreed to give a cash compensation of 150 billion rupees to state fuel retailers to partially compensate them for losses on sale of subsidised fuels in July-September, two finance ministry sources said.
Indian Oil Corp, the country's biggest fuel retailer, last week reported its largest ever net loss of 74.86 billion rupees in the July to September period.
The other two state-run retailers, Bharat Petroleum and Hindustan Petroleum, also reported losses during the quarter.
($1 = 50.180 Indian Rupees)
(Reporting by Nidhi Verma; Additional Report by Rajesh Kumar Singh; Editing by Jo Winterbottom)
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