For the second time in as many months, the Government on Wednesday night cut petrol price by Rs 5 a litre and diesel by Rs 2 per litre, while the domestic LPG rate was also slashed by as much as Rs 25 per cylinder.

"The Cabinet Committee on Political Affairs headed by External Affairs Minister Pranab Mukherjee decided to reduce petrol, diesel and LPG prices to pass on the benefit of softening international oil prices to consumers," Petroleum Minister Murli Deora told media-persons in New Delhi.

The reduction will be effective from midnight Wednesday,Mukherjee said.

"We are giving relief to housewives," Railway Minister Lalu Prasad said pointing to the cut in the cooking gas price. The reduction comes on back of the Rs 5 a litre cut in petrol price and Rs 2 per litre cut in diesel price on December 6 last year.

The reduction will help further ease inflationary pressures and benefit the common man.

Petrol in Delhi will cost Rs 40.62 a litre instead of the present Rs 45.62 per litre, while diesel will be sold at Rs 30.86 per litre as against current Rs 32.86 a litre. Similarly, a 14.2-kg domestic LPG cylinder will now cost Rs 279.70 in place of Rs 304.70. 

While state-run oil firms were making a neat Rs 9.86 a litre profit on petrol before this price reduction and Rs 3.48 on every litre of diesel, they were still losing Rs 32.97 per LPG cylinder and Rs 12.16 per litre of kerosene. The reduction could have been sharper but for the losses on LPG and kerosene.

Petroleum Secretary R S Pandey said no decision on raising excise and customs duty to mop up any extra revenue has been taken. Also, the parallel proposal of freeing petrol and diesel prices from administrative control has not been acted upon.

"The Government," he said, "will made good all of the losses of state-run retailers after accounting for Rs 32,000 crore contribution from upstream firms, through issue of oil bonds."