With elections to five State Assemblies hardly months away and crude prices easing in the global market, Petroleum Minister Veerappa Moily on Tuesday ruled out an increase in diesel and LPG prices for now.
The Minister told reporters that no proposal had been moved by the Ministry for raising the diesel price beyond the 40-50 paise a litre monthly increase, which was being implemented since this January.
With the rupee depreciating sharply this fiscal, the difference between the cost of producing fuel and the retail selling price has widened. Diesel is being sold at a loss of Rs.14.50 per litre. Besides, state-owned oil firms are losing Rs.36.83 a litre on kerosene sold through ration shops and Rs.470.38 per a 14.2-kg LPG cylinder. “We are concerned about under-recoveries. We are working on alternatives to reduce the under-recoveries. If you ask me today, there is no proposal. But we live in a dynamic environment,” Mr. Moily said.
About Rs.1,28,976 crore under-recovery was likely on sale of diesel, LPG and kerosene this fiscal, which would be met by the government cash subsidy dole of Rs.66,931 crore and another Rs.62,045 crore coming from the upstream firms like the ONGC.
A Rs.50 per LPG cylinder increase would trim cooking gas losses by Rs.2,604 crore. A possible Rs.2 per litre hike in kerosene price would cut losses by Rs. 1,014 crore. The Minister said every 100 paise depreciation in the rupee against the U.S. dollar increased the under-recovery of the public sector oil marketing companies through sale of diesel, PDS kerosene and domestic LPG by about Rs.7,900 crore per annum.