M Veerappa Moily hints at reducing price of petrol after rupee stabilises

Union Petroleum and Natural Gas Minister M Veerappa Moily has hinted at reducing the petrol price once the value of rupee stabilises.

Interacting with media in Chennai recently, Moily said that the stabilisation of the rupee may bring in a relaxation in the prices of petrol and diesel.

The hike in price of petrol came into effect from midnight Friday (June 28).

The rupee fell to a record low of 60.76 to the dollar that week and is down about 11 percent since the start of May.

"Suppose the rupee stabilises and then we will be in a position to definitely reduce it because we had already reduced nine rupees ($0.150) earlier on petrol. And of course we have to raise the price again. But I think in the future we may be in a position to reduce it," said Moily.

The price hike decision comes in line with the Indian government's January decision to gradually move to market pricing with hikes of small dozes.

India's three state-run fuel retailers - IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp tend to move their prices together.

India liberalised petrol prices in June 2010, but the government continues to unofficially dictate prices to refiners.

In January, India allowed fuel retailers to raise the price of subsidised diesel by 1 cent a litre every month and asked bulk buyers to pay market rates.