)
State-owned oil companies' losses on selling diesel below the market price have declined 46.5 per cent to Rs 1.33 per litre on continued monthly price hikes coupled with softening global crude oil prices.
Brent crude oil prices slid as higher output from the Organisation of Petroleum Exporting Countries (OPEC) and low demand in the US, the world's largest oil consumer, outweighed tensions in West Asia, Africa and the Ukraine.
The price of the Indian basket of crude oil dipped to $104.43 a barrel on Thursday from $106.12 a day before. The rupee closed weaker at 60.25 to a dollar on Thursday from 60.15 a day before. The government controls the prices of diesel, kerosene and cooking gas to insulate Indian consumers from high international crude oil prices. This causes Indian Oil, Hindustan Petroleum and Bharat Petroleum to lose money on sales of these petroleum products, a part of which is compensated by the government.
The state-owned oil companies also lose Rs 32.98 on every litre of kerosene sold in ration shops and Rs 447.87 on a cylinder of cooking gas. These companies are now losing Rs 226 crore a day by selling diesel, kerosene and cooking gas cheap, lower than Rs 261 crore in the fortnight to July 30.
The United Progressive Alliance government had in January 2013 introduced a 50 paise monthly price hike in diesel to eventually eliminate the subsidy. Diesel prices have risen by Rs 11.2 a litre in 18 installments and are expected to be deregulated by December. Diesel prices were last hiked by 56 paise a litre on Thursday.
The state-owned oil companies on Thursday also lowered the price of diesel sold to industrial consumers like the railways in line with the decline in crude oil prices. The price of bulk diesel was reduced by Rs 0.72 to Rs 58.6 a litre in Delhi. Prices for bulk diesel buyers were deregulated in January 2013.
Subsidised diesel sales made up for 45 per cent, or Rs 62,837 crore, of the total losses of Rs 139,869 crore of Indian Oil, Bharat Petroleum and Hindustan Petroleum for selling fuel cheap in 2013-14. Losses on kerosene stood at Rs 30,574 crore and cooking gas at Rs 46,458 crore.
The government reckons the cummulative losses in 2014-15 will be Rs 91,665 crore, a 34 per cent decline over the previous year. According to rating agency ICRA, the losses will be contained at Rs 100,000 crore this year if the monthly diesel price hikes continue, the rupee-dollar exchange rate averages 60, and crude oil prices stay in the vicinity of $108 a barrel.
