Oil companies’ gains on diesel sales jumped 87 per cent within a fortnight on a historic slide in global crude prices. Their profits from diesel, recorded for the first time ever, continue as the government delays a decision on deregulating its price.
“The over-recovery on high-speed diesel (HSD), applicable for the second fortnight effective October 16, is now Rs 3.56 per litre. The over-recovery was Rs 1.90 per litre during the first fortnight of the month,” a petroleum ministry statement said.
Losses by Indian Oil, Bharat Petroleum and Hindustan Petroleum for selling diesel below market prices ended last month as crude prices slid and the government this year continued to raise local prices by 50 paise a litre a month.
According to the petroleum ministry, Indian Oil, Bharat Petroleum and Hindustan Petroleum are losing Rs 31.22 on every litre of kerosene sold in ration shops and Rs 404.64 on every cylinder of cooking gas. The companies are losing around Rs 139 crore a day by selling the kitchen fuels cheap, less than their Rs 156 crore daily loss over the previous fortnight.
The United Progressive Alliance (UPA) government had decided in January 2013 to decontrol diesel prices in phases through monthly increases of 50 paise until domestic rates achieved market parity. Since then, diesel prices have been increased by Rs 11.81 per litre in 19 installments. Prices were last revised on August 30 through a 57 paise hike to Rs 58.97 per litre.
With a continued slide in crude prices, the oil companies’ gross under-recoveries are likely to fall from Rs 139,869 crore in 2013-14 to less than Rs 80,000 crore in 2014-15. This will reduce the government’s Rs 63,000 crore fuel subsidy in 2013-14 by by over 26 per cent this year.
“The over-recovery on high-speed diesel (HSD), applicable for the second fortnight effective October 16, is now Rs 3.56 per litre. The over-recovery was Rs 1.90 per litre during the first fortnight of the month,” a petroleum ministry statement said.
Losses by Indian Oil, Bharat Petroleum and Hindustan Petroleum for selling diesel below market prices ended last month as crude prices slid and the government this year continued to raise local prices by 50 paise a litre a month.
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The price of the Indian basket of crude oil has slumped 28 per cent from a peak of $115 a barrel in June. Lower demand from China and projections of weaker global economic growth, coupled with oversupply, are driving crude prices down.
According to the petroleum ministry, Indian Oil, Bharat Petroleum and Hindustan Petroleum are losing Rs 31.22 on every litre of kerosene sold in ration shops and Rs 404.64 on every cylinder of cooking gas. The companies are losing around Rs 139 crore a day by selling the kitchen fuels cheap, less than their Rs 156 crore daily loss over the previous fortnight.
The United Progressive Alliance (UPA) government had decided in January 2013 to decontrol diesel prices in phases through monthly increases of 50 paise until domestic rates achieved market parity. Since then, diesel prices have been increased by Rs 11.81 per litre in 19 installments. Prices were last revised on August 30 through a 57 paise hike to Rs 58.97 per litre.
With a continued slide in crude prices, the oil companies’ gross under-recoveries are likely to fall from Rs 139,869 crore in 2013-14 to less than Rs 80,000 crore in 2014-15. This will reduce the government’s Rs 63,000 crore fuel subsidy in 2013-14 by by over 26 per cent this year.