New Delhi: For the first time in nearly three years, petrol price has been slashed on Tuesday, by Rs 1.85 per litre.

The reduction more than erases the steep Rs 1.85 a litre hike in rate announced earlier this month. It eases the pressure on the government ahead of the winter session of Parliament beginning next week.

Both the Opposition and the UPA allies had strongly criticised the UPA for allowing state-owned oil companies to increase petrol price at a time when headline inflation was nearing double digits.

"The reduction in oil price warrants a cut of Rs 1.85 per litre in the petrol price, excluding all taxes," an official said, adding that the retail price -- after taking into account the tax incidence -- would go down by Rs 2.22 per litre in Delhi.

Petrol in Delhi will cost Rs 66.42 per litre from midnight tonight against the current rate of Rs 68.64 a litre, the three oil marketing companies said.

"We had gained Rs 1.85 per litre (excluding all taxes) since the last price revision because of a fall in global oil rates and a marginal appreciation in rupee value. We are passing this on to consumers," Indian Oil Corp (IOC) Chairman R S Butola said.

After adding 20 per cent local sales tax or VAT, the decrease in Delhi comes to Rs 2.22 per litre.

Petrol price in Mumbai has been reduced by Rs 2.34 per litre to Rs 71.47 per litre, while in Kolkata the cut is Rs 2.31 to Rs 70.84 a litre. Price in Chennai will come down to Rs 70.38 per litre from Rs 72.72, a decrease of Rs 2.35 per litre.

This is the first reduction in petrol price since January 2009 when rates were cut by Rs 5 per litre. Before that the then Oil Minister Murli Deora had made oil firms slash petrol price by an equal proportion in December 2008. The average price of gasoline (petrol) in the first fortnight of November was about USD 5 per barrel lower than the rate which formed the basis for the price revision on November 3, said a top executive at one of the state-owned fuel retail companies.

"Since petrol is a deregulated commodity which moves in tandem with international rates, we are passing on the reduction to consumers," he said.

Gasoline, or petrol, prices averaged USD 115.85 per barrel during the first half of November, as against the USD 121.67 per barrel average during the second fortnight of October, which formed the basis for the Rs 1.80 per litre price increase.

The rupee's exchange rate has averaged 49.20 against the US dollar this month, higher than Rs 49.40 in October.

Oil companies revise the price of petrol, which was freed from government control in June last year, on the basis of fortnightly average international oil prices.

IOC in a press statement said the oil firms had raised petrol price upward by Rs 4.17 per litre (Rs 5 per litre hike in pump rates after including local tax) on May 15, by Rs 2.62 a litre (Rs 3.14 per litre at pumps) on September 16 and Rs 1.50 a litre (Rs 1.80 per litre at petrol pumps) on November 4.

(Agencies)