NEW DELHI: Petrol and diesel prices are the costliest in the country in Andhra Pradesh, Telangana, and Kerala while it is cheapest in smaller states and UTs like Andaman & Nicobar Islands, Delhi, and those in the North East, mainly due to differentials in local sales tax or VAT rates, according to the oil industry data.

The three state-owned fuel retailers - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) - last week cut petrol and diesel prices by Rs 2 a litre each, ending a nearly two-year hiatus in a price revision. That reduction brought relief to fuel users but rates continue to be above Rs 100 a litre mark in some states due to higher Value Added Tax (VAT). Commenting on the price cut, Goldman Sachs, a global firm, said the net marketing margin of the three oil marketing companies will decline to Rs 08-09 a litre from Rs 1.7-2.7 a litre.

Morgan Stanley, an investment company, said the price cut should finally remove a key overhang for fuel retailers.