It’s a tectonic shift in how petrol and diesel are sold to end customers. Starting from May, state-run companies - which run the majority of the country’s petroleum retail units - will sell petrol and diesel at dynamic prices based on international crude oil prices.

This plan is set to be rolled out on a pilot basis in Puducherry, Vizag, Udaipur, Jamshedpur and Chandigarh.

Currently, Indian Oil, Bharat Petroleum and Hindustan Petroleum (90% of all petrol pumps in the country) change their prices every two weeks based on international rates.  

According to Financial Express, many developed countries in the world follow this method of retail pricing, and this will help in curtailing the losses of the national companies.

“The proposed move will allow the oil companies to align their retail prices more closely with the crude prices, and will help them in tapering their losses, as currently, the oil companies are vulnerable to fluctuations in currency and crude oil prices over the 14-day cycle of retail price adjustment. This shift in pricing practice will also help in predicting their margins more accurately,” the FE report noted.

An Economic Times report said that in actuality, dynamic pricing won’t actually bring any shock value to the customers as the prices are likely to increase or decrease only in paisas on a daily basis.

According to a Livemint article in January, the idea was first tried by BPCL and HPCL on a pilot basis, and HPCL had mooted the idea as early as September, 2016.