Diesel price hiked by 50 paise a litre; Petrol price unchanged

Nov 30, 2013:

Diesel price was hiked by 50 paise a litre on Saturday. The price of petrol, however, was kept unchanged.

The revised prices will take effect from Sunday.

The price of the fuel was last hiked by a similar 50 paise per litre on October 31, when that of petrol was cut by Rs. 1.15 a litre, without taxes.

This was an eleventh hike since January 17, in line with the January decision of the government allowing oil companies freedom to raise prices in small doses every month to wipe out mounting losses.

After this revision, the prices in the four major cities will be as follows:
Delhi - 53.67 per litre;
Kolkata - 58.08 per litre;
Mumbai - 60.70 per litre, 
Chennai - 57.23 per litre. 

At present, petrol costs Rs. 71.02 a litre in Delhi.

There was no change in petrol prices as oil companies decided not to pass on the 25-30 paise increase necessitated by depreciation of the rupee against the US dollar.

State-owned oil firms, which revise petrol prices on the 1st and 16th of every month based on trends in oil prices and currency exchange rate in the preceding fortnight, had left the rates unchanged even on November 16.

State-owned fuel retailers, who control 95 per cent of petrol pump sales, sell diesel at government-controlled rates, which are way lower than the cost of production.

While petrol price is deregulated since January, 2010 and is market determined, diesel prices are controlled by the government, which allows minor revisions each month.

While most of the shortfall on diesel sales should have been wiped out, losses mounted to Rs. 14.50 per litre in July-August as the rupee fell about 25 per cent from April levels.

The recent firming up of the rupee against the dollar and the monthly price increases have trimmed these losses to Rs. 9.99 a litre. Diesel rates have risen by a cumulative Rs. 6.62 this year.

Indian Oil Corp, the country's largest fuel retailer, said the 50 paise per litre increase in diesel rates was "pursuant to government of India order dated January 17, 2013, whereby oil marketing companies have been authorized to increase the retail selling price of diesel within a small range every month until further orders".

"Even after the current increase, under recovery (loss) on diesel shall stand at Rs. 9.99 per litre," the state-owned oil retailer said in a statement.

The loss on diesel widened from Rs. 9.58 at the beginning of November due to depreciation of the rupee.

The rupee is down 13.55 per cent against dollar so far this year.

On Friday, the currency ended at 62.44 per dollar compared to 62.41 the previous day. Despite ending the week with mild losses, the rupee notched a second consecutive weekly gain. (Read more)

Besides diesel, oil firms lose Rs. 36.20 per litre on kerosene sold through the public distribution system and Rs. 542.50 per 14.2-kg cylinder of domestic cooking gas (LPG).

The losses on kerosene and LPG have widened from Rs. 35.77 per litre and Rs. 482.50 per cylinder, respectively, at the beginning of the month.

"For the year 2013-14, the Corporation is expected to incur under-recovery of around Rs. 72,000 crore on sale of three sensitive products," the IOC statement said.

The combined loss for Indian Oil, Bharat Petroleum Corp and Hindustan Petroleum Corp is estimated at about Rs. 1,39,000 crore.

Oil Minister M Veerappa Moily had said on November 20 that diesel prices will be deregulated in six months with gradual price hikes. The monthly increases in rates will continue as planned, he had said.

[IMAGE via NDTV] 
CONTENT SOURCE: http://profit.ndtv.com/news/industries/article-diesel-price-hiked-by-50-paise-a-litre-petrol-price-unchanged-373666