JOIN USIn a relief to the masses for the time being, the government has decided to absorb rise in the price of diesel and not pass it on to the consumers beyond the regular 50-paise-per-litre hike despite losses having gone up to Rs 8.60 per litre in the month of June.
Diesel price is due for revision early next week and Petroleum Minister Veerappa Moily said that consumers would not be made to suffer.
”Oil marketing companies (OMCs) are running at a loss. It has gone above Rs 8 per litre again, but we are not going to increase the diesel price more than 50 paise, as decide at the beginning of the year,” Moily replied when asked if the government was also thinking of taking more measures in the wake of rising under-recoveries.
A continuously depreciating rupee and rising crude prices in the international market has led to widening of losses on diesel, as also on cooking fuel. With the rupee dropping below 60 to a US dollar, losses on diesel have climbed to over Rs 8, industry sources said.
Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum had at the beginning of the fiscal estimated a Rs 80,000-crore revenue loss on selling diesel, cooking gas (LPG) and kerosene at government-controlled rates.
Assuming crude price to be $105 per barrel and an exchange rate of Rs 60 to a dollar, the under-recovery or revenue loss is expected to be Rs 1,58,102 crore, they said.
Diesel prices have been hiked on five occasions since January, when the government authorised state-owned oil firms to increase prices by up to 50 paise per litre every month till entire losses on the fuel are wiped out.
Oil firms are also losing Rs 30.53 per litre on kerosene, sold through the public distribution system, and Rs 368.50 per 14.2-kg domestic cylinder of LPG.
Crude shock
* The government allowed oilcompanies to hike diesel prices by 50 paise in January this year.
* Since then diesel price hasincreased 5 times
* From January to June, rupee depreciated from 54.33 to 60.00 to a US dollar.
* A Re 1 depreciation against the US dollar increased under-recovery on diesel by 76 paise.