While the government has allowed Oil Marketing Companies (OMCs) to raise diesel prices, the petrol deregulation experience shows that the government continues to control petroleum prices even after the so-called "deregulation". In fact, OMCs made Rs 2,000 crore revenue loss on sale of petrol during the first half of the financial year.
Petrol price on Thursday cut by Rs. 0.95 per litre, excluding State levies. Petrol decontrol had seen the differential between diesel and petrol rising to around Rs 20 in Delhi impacting sale of petrol vehicles. Petrol prices were decontrolled in June 2010 when the differential was Rs 11.3. Since then, petrol prices have been revised 27 times leading to an overall 31 per cent jump in rates.
Under the new pricing regime, the national capital region itself has seen a hike of around 31 per cent from Rs 52.43 per litre to Rs 67.24 so far. Prices were increased 19 of the 26 times rates were revised.
The Kelkar Committee report had suggested a gradual phase-out of subsidy on diesel pricing and LPG. The panel had recommended a hike of Rs 4 per litre on diesel, Rs 2 per litre on Kerosine and Rs 50 per LPG cylinder. Prices could be hiked every month until the revenue losses are covered, it had said. OMCs' revenue losses on account of selling subsidised petroleum products stand at Rs 160,000 crore.
Oil companies have been looking for a revision even in petrol rates since November due to Rupee-Dollar imbalance. However, the hike did not take place owing to political pressure and assembly elections in various states.
On Tuesday, Delhi saw a 32 paise hike in petrol prices, the increase in rates was due to withdrawal of VAT exemption in June last year, the first hike since November 2012. At the same time, prices came down or remained static only seven times during the time period. The highest raise was in May 2012 by Rs 7.5 per litre.
In Delhi, prices for diesel saw a change last October to Rs 47.15 per litre. Subsidized LPG costs for per 14.2-kg cylinder is now standing at Rs 410.50, while nonsubsidised domestic price stands at Rs 895.50.