An increase in petrol, diesel, domestic cooking gas and kerosene prices looks "imminent" after the finance ministry said it had no money to provide for fuel subsidy. “This (hike) is imminent. There is no question of holding it back now,” a top oil ministry official said on Tuesday.
In all possibility, fuel prices may be increased after the current monsoon session of Parliament ends on Friday.
Diesel, domestic Liquefied Petroleum Gas and PDS kerosene rates have not been changed since June 2011, even though the cost of production has soared 28 per cent. State-owned fuel retailers are losing Rs 560 crore a day on the sale of diesel and cooking fuel, and are forced to resort to short-term borrowings to meet funds needed for importing crude oil (raw material).
Borrowings of the three fuel retailers have shot up to Rs 1,57,617 crore at the end of June from Rs 1,28,272 crore as on March 31. Besides, they are losing close to Rs 5 per litre on petrol, which was decontrolled in June 2010, but its rates have not moved in tandem with cost. "The finance ministry says it is not left with funds to subsidise oil companies. Oil companies are jewels of India. They need to be saved at all cost. Governments come and go, but oil companies will be required to fuel the country,” the official said.
Diesel is being sold at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 a litre and domestic LPG at Rs 347 for a 14.2-kg cylinder.
At the current rates, the three firms are projected to lose Rs 1,92,951 crore of revenue in the financial year ending March 31, 2012.