Petrol and diesel prices will not be reduced as a result of an excise duty cut on auto fuels.
"The February 16 reduction in prices of petrol by Rs 2 a litre and diesel by Re one per litre was done on the premise that government will share part of the cut by way of duty cut.
"As Budget was around the corner, no duty adjustment was done then and Finance Minister has kept that promise today," Petroleum Secretary M S Srinivasan said.
Finance Minister P Chidambaram on Wednesday reduced excise duty on petrol and diesel from 8 to 6 per cent.
The excise duty cuts would have translated into a Rs 0.47-0.48 a litre in petrol and diesel price but since the February 16 reduction was done despite oil companies losing Rs 1.35 a litre on diesel, the cut is not being passed on to the consumers, Srinivasan said.
After the price cut, under-realisation on diesel widened to Rs 2.35 a litre. On Petrol, the companies were making Rs 2 a litre profit which was wiped out by the price cut.
Indian Oil Corp (IOC) director (finance) P V Narasimhan said the excise duty cut would result in the company's under-reliasation on the two fuels coming down by Rs 1,250 crore.
For the industry, the excise duty cut would mean about Rs 2,500 crore less in losses on fuel sales.
