Petroleum ministry sources said that if the present excise duty of Rs 14.30 per litre is reduced by half, it would save the petroleum companies Rs 7.50 per litre. The price will then be hiked by just Rs 5. In 2002-03, soon after the administered price mechanism was discontinued, petrol was sold at market-determined prices. Petrol used to subsidise the price of diesel.
The NDA government then started to subsidise the cost of petrol. The oil companies now want petrol again to be sold at market prices.