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A higher dose of diesel price increase and an increase in price of subsidised cooking gas is likely to happen after September 17 when petroleum Minister Veerappa Moily is scheduled to return from an official trip overseas.
After the decision to go for a phase-wise decontrol of diesel prices in January this year, the ministry of petroleum and natural gas is looking to go for a higher dose of diesel price hike, more than the mandated 50 paise per month.
“A decision on this should be taken at the higher level by the Congress core committee and Cabinet committee on political affairs next week,” said a senior petroleum ministry official told Business Standard. There were reports that the ministry is approaching Cabinet to go for a higher dose of diesel price hike by more than Rs 3per litre.
Today, petroleum secretary Vivek Rae told the media, “Some burden has to be borne by consuming population. That is the challenge government faces. It is a political challenge, it is an economic challenge. It is a challenge we cannot run away from.”
There were also reports that petrol prices may be cut as much as Rs. 1-1.50 per litre next week on falling international oil rates and appreciating rupee. Rae added that subsidy burden has reached unsustainable levels which cannot be financed by government budget and oil companies.
Even after the monthly dose of increase in diesel price in August, the under recovery on under recovery on retail diesel stands at Rs 12.12 a litre for the first fortnight of this month Following the decontrol measure initiated by the government on January 17 this year, OMCs have been authorized to increase the retail selling price of Diesel within a small range every month until further orders.
The deteriorating rupee had adversely impacted under-recovery of other sensitive products which, at current levels, are Rs.36.83/litre for kerosene and Rs 470 per cylinder for domestic LPG. For the year 2013-14, the under-recovery on sensitive petroleum products is expected to cross Rs 1,61,000 crore at current level.
Oil subsidy has increased by Rs 20,000 crore in last two months alone on depreciating rupee that made imports costlier. Earlier, petroleum minister M Veerappa Moily had denied higher dose of disel price hike saying that there are no such plans at the moment.
