Come June 16 and petrol as well as diesel prices across the country will be revised on a daily basis in sync with international rates as happens in most advanced markets.
After the successful pilot in five cities, state-owned oil companies will from June 16 revise rates on a daily basis across all the 58,000 petrol pumps in the country.
Petrol and diesel price will change on a daily basis by a few paisa per litre depending on movement of oil prices in international market and variation in foreign exchange rates.
Rates will vary from city to city as well as from petrol pump to petrol pump with Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) deciding to follow a marginal differential pricing.
"We are moving into a dynamic pricing. Correction in prices now happen after a gap of a fortnight but from now on it will be on daily basis to reflect the cost," IOC Chairman Sanjiv Singh said.
Daily price change will remove the big leaps in rates that need to be effected at the end of the fortnight and consumer will be more aligned to market dynamics.
The three firms in separate but identical statements said they implemented daily revision of retail selling price (RSP) of petrol and diesel on a pilot basis in Udaipur in Rajasthan, Jamshedpur in Jharkhand, Puducherry, Chandibarh and Vizag in Andhra Pradesh from May 1.
"After its successful implementation, public sector oil marketing companies (OMCs) have now decided to start daily revision in RSP of petrol and diesel in the entire country with effect from June 16, 2017," the statement said.
State fuel retailers currently revise rates on 1st and 16th of every month based on average international price of the fuel in the preceding fortnight and currency exchange rate.
Instead of using fortnightly average, pump rates will reflect daily movement in international oil prices and rupee- US dollar fluctuations.
"Daily price revisions of petrol and diesel will make the retail prices more reflective of the current market conditions, minimising the volatility in the retail price," the statements said.
This, it said, would lead to increased transparency in the system.
"This will also enable smoother flow of products from refinery/depots to retail outlets (petrol pumps)," the statement said. "Many developed countries are already revising the prices of petrol and diesel on a daily basis."
While petrol price was freed from government control in June 2010, diesel rates were deregulated in October 2014. Technically, oil companies have freedom to revise rates but often they have been guided by political considerations.
Rates differ by only a few paise between pumps of the three state fuel retailers. Unbranded petrol at IOC pumps in Delhi costs Rs 66.91 per litre, while the same at BPCL pumps in the city is priced at Rs 66.99 a litre. HPCL pumps sell for Rs 67.12 per litre.
Unbranded diesel at IOC pumps in Delhi costs Rs 55.94, Rs 55.99 at BPCL outlets and Rs 60.94 a litre at HPCL pumps.
With daily changes, which are unlikely to more than few paise per litre, the political pressures for not revising rates, particularly when they are to be hiked, will go, sources said.
Petrol price was last revised downward by Rs 1.23 a litre on June 1, and diesel rates were cut by Rs 89 paisa.
"Public Sector OMCs are taking steps to establish an appropriate mechanism for conveying the prices to consumers every day, including daily publishing of the prices in newspaper on a daily basis, prominent displays of prices at the retail outlets, sending of price-related data/SMS from the centralised locations, mobile apps etc," the statements said.