New Delhi: Oil secretary S Sundareshan has said that the government is not considering freeing diesel prices yet, as this could lead to an increase in retail prices that would push up already high inflation. “Diesel price deregulation will mean an increase in prices, which is not fair (under present circumstances),” Mr Sundareshan said at the Economic Editors’ Conference.
The government announced the freeing of petrol prices on June 25, after which the price of petrol has increased by Rs3.50 a litre. The prices have been raised twice by about a rupee, in line with the hike internationally. Petrol costs Rs52.55 a litre in Delhi.
Diesel prices were raised by Rs2 a litre on June 25, and it was said that this too would be freed gradually. A move to deregulate the rates now would mean a further increase in the price of the fuel by Rs2.87 a litre. Diesel costs Rs37.71 a litre in Delhi.
“The decision was taken in June when the crude oil price was at $73-74 a barrel. Since then it has gone up to $82-83 a barrel and it will be unfair to think that the diesel price will be market-determined at these levels,” Mr Sundareshan said. Diesel price deregulation is “not possible with the current prices ... diesel deregulation at this juncture will lead to price increase and it is unreasonable to expect it at this juncture.”
In June, the government also raised the price of domestic LPG by Rs35 on a 14.2 kg cylinder and the price of kerosene by Rs3 a litre. Despite these hikes, public sector fuel retailers lose Rs16 on the sale of every litre of kerosene, and Rs188 on each LPG cylinder.
Mr Sundareshan said IOC, BPCL and HPCL lost Rs31,367 crore in revenues in the April-September quarter on sale of diesel, domestic LPG and kerosene below the cost price. This includes Rs2,227 crore the oil firms lost on selling petrol below the cost price till June 25.
Of this loss, upstream oil firms Oil and Natural Gas Corporation, GAIL India and Oil India will chip in Rs10,456 crore and about Rs10,000 crore would come from the government by way of cash compensation.
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