As Indian rupee near collapse, diesel price hike in offing by as much as Rs 2-3/ltr

Aug 14 2013, 19:49 IST
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With prices being raised regularly, the losses on diesel had come down to below Rs 3 per litre in May but rupee falling by 12 per cent since April has resulted in the difference climbing to Rs 9.29 per litre. Reuters With prices being raised regularly, the losses on diesel had come down to below Rs 3 per litre in May but rupee falling by 12 per cent since April has resulted in the difference climbing to Rs 9.29 per litre. Reuters
SummaryOil Ministry officials say the move, when it happens, will be a political one.

To offset the impact of fall in Indian rupee value, the government is mulling a Rs 2-3 per litre one-time diesel price hike, but there is no proposal to raise cooking gas (LPG) and kerosene rates.

The one-time hike, if approved by the Cabinet, will be over and above the 50 paisa per litre increase in rates that happen every month to cut down the difference between cost of production and retail selling price.

Also read: Diesel & LPG usage falls on frequent price hikes, cylinder cap

"There is certainly a case for raising diesel prices. But it will have to be a political decision," a top Oil Ministry official said.

The government had in January allowed oil companies to raise diesel rates by up to 50 paisa per month till such time that the losses on the most consumed fuel in the country are wiped out.

Related: Losses on diesel sale widen to R9.45 a litre

With prices being raised regularly, the losses on diesel had come down to below Rs 3 per litre in May but rupee falling by 12 per cent since April has resulted in the difference climbing to Rs 9.29 per litre.

"Clearly, the 50 paisa increase is not sufficient. We need to do more," the official said.

State-owned fuel retailers Indian Oil Corp, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd have suggested raising the monthly quantum to cut losses.

Oil Minister M Veerappa Moily said the one-time and oil company suggestions are under consideration but no decision has been taken yet.

"That's under consideration, but we have not yet decided," he said.

Moily, however, said there is no proposal to raise LPG or kerosene rates.

Diesel price was last hiked on August 1 when prices in Delhi went up by 56 paisa (after including local taxes) to Rs 51.40 per litre.

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