Centre to raise diesel prices soon

With the Indian basket of crude oil jumping another dollar to reach the year’s highest level at $89.32 a barrel today, the government is likely to increase diesel prices shortly. The rise would, however, not cover the entire revenue loss of Rs 4.80 a litre being incurred by government-owned oil marketing companies (OMCs) on its sale.

Petroleum Secretary S Sundareshan today said a decision would be taken soon. The increase, which would be the first since the Rs 2 rise in June, would help lower the government’s subsidy bill, besides helping OMCs to meet part of their underrecoveries. The estimated revenue loss on the sale of auto and cooking fuel is now expected to rise to Rs 61,432 crore as against Rs 53,000 crore estimated after the hike in June and Rs 46,051 crore in 2009-10.

Though petrol prices were decontrolled in June, with a group of ministers deciding to go for a diesel decontrol later, the secretary ruled out freeing of diesel prices in the near term, owing to high inflation. Sundareshan did not comment on the quantum of increase in the prices of diesel.

The benchmark Indian basket has averaged more than $10 higher than last year’s average of $69.76.

OMCs are losing Rs 4.80 on every litre of diesel sold as global crude oil prices touched $90 a barrel on Tuesday, Sundareshan said. “It (global crude oil price) shows no sign of abating, so the government has to take a view on this ... we think they should take a decision as quickly as possible,” he told reporters.

OMCs bucked the falling stock market to rise on reports of increase in prices of petrol and diesel by Rs 2 a litre next week. HPCL rose 3.38 per cent, BPCL 2.12 per cent and Indian Oil Corporation 0.75 per cent.

OMCs are revising the retail selling price of petrol depending upon the movement in international prices, though they continue to incur revenue loss on the sale of diesel, PDS kerosene and domestic LPG.