The profit on sale of diesel swelled to Rs.1.90 a litre as the Oil Ministry awaits return of Prime Minister Narendra Modi to cut rates.
With international oil prices continuing to slide, the over-recovery or profit on diesel sales, which was 35 paise in the second-half of September, climbed to Rs.1.90 a litre, an official statement said here.
Over-recovery or profit should have in natural course translated into a price reduction to bring retail selling price on a par with cost. But the Oil Ministry decided to wait and watch last month.
Now, with the profit rising further, it wants to reduce the rates and pass on the benefit to consumers but is unsure of its mandate.
Sources said the Ministry was of the opinion that it did not have a clear mandate to reduce rates post the January, 2013, decision of the Cabinet to hike prices by 40-50 paise a litre every month.
Diesel prices have not been deregulated or freed yet and so rates cannot be reduced.
Petrol, on the other hand, had been deregulated in June, 2010, and rates have since then moved every fortnight in tandem with the cost. Petrol rates were on Tuesday cut by 54 paise in line with the international trend.
Sources said Oil Minister Dharmendra Pradhan had already written to Mr. Modi on the emerging scenario. Also, the Ministry had written to the Election Commission seeking their concurrence for the price decrease in view of the State assembly elections in Maharashtra and Haryana.
A decision would be taken after Mr. Modi’s return, they said.
Softening international oil rates have meant that diesel under-recovery or the difference between retail price and its imported cost was wiped out, and there was an over-recovery of 35 paise a litre from September 16. This over-recovery is now Rs 1.90 a litre.
But under-recoveries continue on kerosene and LPG.
