Until further orders, oil marketing companies can increase diesel price by 40-50 paise a litre every month, the minister said. It might take close to two years to remove the losses on diesel at current international price of the commodity. Retail losses on the fuel is calculated as the gap between its domestic price and the price one might have to pay if it has been imported and sold. Retailers now incur a loss of about R10.80 a litre on selling the fuel at state-set price.
On January 17, oil retailers had raised diesel price by 45 paise. The commodity now costs R47.65 a litre in New Delhi. The government had also decided to charge bulk consumers like defence, railways and state transport undertakings market price, which is almost R10 a litre more than retail selling rate, to save an estimated R12,907 crore in annual subsidy.
Moily said he will look into the plans of states such as Gujarat and Tamil Nadu, asking their public transport vehicles to refuel at petrol pumps instead of buying diesel from oil firms directly.