New Delhi, Jul 12 : Diesel prices may be hiked after Presidential elections on July 19 as the Government plans to take bold measures to rein in run-away fiscal deficit.
“Price increase is inevitable. But date and time, nobody can say,” a top Oil Ministry source said. Diesel prices have not been raised since June 25 last year, and state-owned oil firms sell the fuel at a loss of Rs 10.33 a litre.
“It (price increase) is on the radar for sometime now,” the source, said refusing to say when the diesel rates would be increased.
Asked if diesel prices can be increased after the July 19 Presidential election, the source said, “it is your guess”. Though an high-powered ministerial panel had in June 2010 decided in-principle to deregulate diesel prices, the nation's most consumed fuel continues to be tightly controlled by the government.
The Empowered Group of Ministers (EGoM), which is authorised to decide on diesel pricing, has not met since June 25, 2011. The panel was previously headed Pranab Mukherjee, who last month resigned as Finance Minister to contest the July 19 Presidential poll.
The EGoM has so far not been reconstituted and it is not clear who will head it after Mukherjee's exit. The panel has representatives of ruling UPA's allies like Trinamool Congress and DMK.
The source said state-owned oil firms are unlikely to change petrol prices in next few days as rupee and international oil rates continue to be highly volatile. “Oil marketing companies are not losing any money on petrol right now. But we have wait and watch for sometime,” he said.
Petrol prices have been reduced twice last month after the massive Rs 7.54 a litre increase effected from May 24.
Rates were cut by Rs 2.02 per litre from June 3 and then again by Rs 2.46 a litre from June 29.
In Delhi, petrol is currently priced at Rs 67.78 a litre, while a litre of diesel costs Rs 41.29.
The government had in June 2010 deregulated or freed petrol pricing from its control but rarely have the retail pump rates moved in tandem with market/international prices.
“There is no loss on petrol sale currently. But there is excessive volatility both on the rupee and international oil prices,” the source said.
Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) together are projected to lose Rs 1,49,032 crore on sale of diesel, domestic LPG and kerosene this fiscal.
Besides losing Rs 10.33 per litre on diesel, the state-owned oil firms are losing Rs 28.56 per litre on kerosene sold through the public distribution system (PDS) and Rs 319 on every 14.2-kg domestic cooking gas LPG cylinder sold to households.
The source said the oil ministry's demand for a Rs 1.70 lakh additional excise duty on small diesel cars and Rs 2.55 lakh on medium and large cars was under consideration of the Finance Ministry.
“We suggested the duty because of the huge gap between the price of petrol and diesel which had resulted in abnormal growth in diesel consumption in the country,” he said.
Diesel costs Rs 26.49 a litre less than petrol. The ministry has argued that additional duty on diesel cars will discourage dieselisation of economy and would bring additional revenue, which could be used to meet part of the fuel subsidy bill.
About 15 per cent of total diesel sold is consumed by car users.
“Price increase is inevitable. But date and time, nobody can say,” a top Oil Ministry source said. Diesel prices have not been raised since June 25 last year, and state-owned oil firms sell the fuel at a loss of Rs 10.33 a litre.
“It (price increase) is on the radar for sometime now,” the source, said refusing to say when the diesel rates would be increased.
Asked if diesel prices can be increased after the July 19 Presidential election, the source said, “it is your guess”. Though an high-powered ministerial panel had in June 2010 decided in-principle to deregulate diesel prices, the nation's most consumed fuel continues to be tightly controlled by the government.
The Empowered Group of Ministers (EGoM), which is authorised to decide on diesel pricing, has not met since June 25, 2011. The panel was previously headed Pranab Mukherjee, who last month resigned as Finance Minister to contest the July 19 Presidential poll.
The EGoM has so far not been reconstituted and it is not clear who will head it after Mukherjee's exit. The panel has representatives of ruling UPA's allies like Trinamool Congress and DMK.
The source said state-owned oil firms are unlikely to change petrol prices in next few days as rupee and international oil rates continue to be highly volatile. “Oil marketing companies are not losing any money on petrol right now. But we have wait and watch for sometime,” he said.
Petrol prices have been reduced twice last month after the massive Rs 7.54 a litre increase effected from May 24.
Rates were cut by Rs 2.02 per litre from June 3 and then again by Rs 2.46 a litre from June 29.
In Delhi, petrol is currently priced at Rs 67.78 a litre, while a litre of diesel costs Rs 41.29.
The government had in June 2010 deregulated or freed petrol pricing from its control but rarely have the retail pump rates moved in tandem with market/international prices.
“There is no loss on petrol sale currently. But there is excessive volatility both on the rupee and international oil prices,” the source said.
Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) together are projected to lose Rs 1,49,032 crore on sale of diesel, domestic LPG and kerosene this fiscal.
Besides losing Rs 10.33 per litre on diesel, the state-owned oil firms are losing Rs 28.56 per litre on kerosene sold through the public distribution system (PDS) and Rs 319 on every 14.2-kg domestic cooking gas LPG cylinder sold to households.
The source said the oil ministry's demand for a Rs 1.70 lakh additional excise duty on small diesel cars and Rs 2.55 lakh on medium and large cars was under consideration of the Finance Ministry.
“We suggested the duty because of the huge gap between the price of petrol and diesel which had resulted in abnormal growth in diesel consumption in the country,” he said.
Diesel costs Rs 26.49 a litre less than petrol. The ministry has argued that additional duty on diesel cars will discourage dieselisation of economy and would bring additional revenue, which could be used to meet part of the fuel subsidy bill.
About 15 per cent of total diesel sold is consumed by car users.
