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Continuing with the monthly price revision regime, oil marketing companies (OMCs) increased the price of diesel by 50 paise a litre effective August 1. Petrol was slashed by Rs 1.09 a litre and domestic cooking gas was reduced by Rs 2.5 a cylinder in line with the decline in global prices of petroleum products.
Diesel will now cost Rs 58.40 a litre in metro cities, bringing the OMCs closer to the market price of the fuel; petrol will be priced at Rs 72.5 a litre and non-subsidised liquefied petroleum gas (LPG) will cost Rs 920 for each cylinder.
The government controls the retail selling price of diesel, LPG and kerosene to insulate consumers from the full impact of high international crude oil prices. This results in underrecoveries to OMCs, partly compensated by government as subsidies.
Losses on diesel sales for the three OMCs — Indian Oil, Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) — had widened to Rs 3.4 a litre in the fortnight ended July 15 on supply concerns owing to the Iraq crisis before narrowing 27 per cent to Rs 2.49 a litre in the fortnight ended July 31.
OMCs’ underrecoveries on diesel sales increased consistently from Rs 9,279 crore in 2009-10 to Rs 92,061 crore in 2012-13 before declining 32 per cent to Rs 62,837 crore in 2013-14. During the first quarter of the current financial year, losses on diesel sales stood at Rs 9,000 crore accounting for 32 per cent of the total underrecoveries of Rs 28,690 crore on the three sensitive products in the three-month period.
The previous United Progressive Alliance government had introduced the regime of a 50 paise monthly price rise in diesel in January 2013. Diesel prices have cumulatively risen by Rs 11.1 a litre in 18 instalments since then and are expected to be deregulated by December. The prices were earlier increased by 50 paise a litre on July 1. The OMCs also reduced the cost of diesel for bulk consumers such as railways by Rs 0.7 a litre. “This is because the price of diesel in the international market has also shown a downtrend,” IOC said. Bulk diesel prices were slashed by Rs 1.09 a litre to Rs 59.3 a litre on July 15.
IOC said global petrol prices had shown a downward trend in the past fortnight, while the rupee has slightly depreciated against the dollar.
“The combined impact of the two factors warrants a decrease in retail selling price of petrol by Rs 1.09 a litre at Delhi with corresponding decrease in other states,” the company added.
The prices were increased by Rs 1.69 a litre on June 30. Petrol prices were de-regulated in June 2010 and have moved more or less in line with costs since then.
Thursday’s cut in non-subsidised LPG prices partially neutralises the rise of Rs 16.5 a cylinder announced on July 1. It was rolled back the next day with the oil ministry deferring the quarterly revision in LPG prices due to increased state-specific levies. The latest price rise would be implemented on the 13th cylinder that a customer would buy after exhausting his year’s subsidised quota of 12 cylinders.
