Diesel under-recovery declines

March 18, 2013 09:46 pm | Updated November 17, 2021 04:43 am IST - CHENNAI:

State-owned oil marketing companies’ under-recovery on diesel, a term denoting the gap between the pump price and the cost if the product was to be imported, has declined by over Rs.2.60 a litre for the current fortnight.

This augurs well for users, particularly bulk consumers such as state transport corporations who, post the dual pricing policy for diesel, are required to pay market-linked prices. An official statement on the latest review by the Petroleum Planning and Analysis Cell, however, said the under-recovery of Rs.8.64 continued to remain high.

The review comes after the companies refrained from exercising their new-found freedom to raise the diesel price up to 50 paise every fortnight until the under-recovery is wiped out. While reducing the petrol prices by Rs.2 a litre (excluding VAT) on March 16, they did not increase diesel prices, presumably on account of the furore it could have led to with the Parliament in session.

An increase in the price could have also provided ammunition to those opposing the dual pricing since a direct consequence of the policy, in the near future, would be a hike in the fares of the buses. The buses began tanking up at retail outlets, after the policy was announced in mid-January, to escape from the higher price they would have to pay if supplied at the depots. Interestingly, earlier this month the Petroleum Minister was on record saying that the Ministry had advised the companies to “take sufficient safeguards and all necessary measures to avoid diversion of subsidised diesel from their retail outlets.”

Last week the Madras High Court restrained the companies from charging state transport corporations a higher price for diesel. It granted an interim injunction till April 12 in this regard. According to reports, the Karnataka and West Bengal governments were also considering approaching the respective high courts with a similar plea. On the ground, not much seem to have changed with oil industry officials in the State stating that they were awaiting orders from their headquarters. They maintain that when buses come to the outlets there is no way they could not be filled as they were like any other consumer.

According to the review, the under-recovery, during the first fortnight of March, was Rs.11.26 a litre. The under-recoveries on kerosene, dispensed through the PDS, and LPG remain unchanged for the current fortnight at Rs.33.43 a litre and Rs.439 per cylinder, respectively.

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