Under-recoveries on diesel widen to Rs 6.08 per litre

"The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee was tentatively scheduled to meet at 1330 hours on December 22. But there is no communication so far on the meeting from the EGoM head (Mukherjee's office)," an oil ministry official said.

A Rs 2 per litre hike in diesel prices was on the agenda of the EGoM meet, with the objective of narrowing the difference between the domestic retail price of the transport fuel and the imported cost.

"The under-recovery, or the revenue oil marketing companies lose on selling diesel, today stands at Rs 6.08 per litre," the official said.

Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp currently lose about Rs 105 crore per day in revenues on selling diesel below the imported cost.
"International crude oil (raw material for diesel) has climbed to USD 90 per barrel, widening the gap between domestic retail prices and their imported cost," he said.
Besides diesel, the oil firms currently lose Rs 17.72 per litre on PDS kerosene sales and Rs 272.19 per 14.2-kg LPG cylinder.

Even after last week's steep Rs 2.94-2.96 a litre hike, the retail price of petrol is Rs 1.2-1.25 a litre short of the imported cost.

The government had in June this year freed petrol prices, but the state firms, who control 98 per cent of the retail market, continue to informally consult the oil ministry before revising prices.

Also, the government had decided to make diesel price market-determined in stages. "Freeing diesel prices at current crude prices is simply not possible," he said.
The three firms are projected to end the fiscal with a Rs 68,361 crore revenue loss on account of the sale of diesel, domestic LPG and kerosene below cost.

"They are losing Rs 215 crore per day on the sale of the three products. Also there are marginal under-recoveries on petrol," the official said.

The official said the international price of crude oil -- the raw material for making petrol and diesel -- was hovering around USD 72-74 per barrel in June when the government freed petrol prices. However, the price of petrol has risen five times since then, even as diesel rates remained unchanged.