No roll-back of increase in diesel prices: Moily

Jan 20 2013, 20:53 IST
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SummaryRuling out a roll-back of the “small” 45 paise increase in diesel prices, oil minister M Veerappa Moily on Saturday said bulk consumers, like railways, will have to find their own budget to buy the fuel at market price.

Ruling out a roll-back of the “small” 45 paise increase in diesel prices, oil minister M Veerappa Moily on Saturday said bulk consumers, like railways, will have to find their own budget to buy the fuel at market price. “No, no, there is no question of roll-back,” Moily told reporters.

The government had two days back raised diesel prices after a gap of four months by a marginal 45 paise per litre for retail users, like car and truck owners, and hiked the rate for bulk users, like defence and railways, by about R10 to cut subsidy bill. After including local sales tax or VAT, the price of diesel for retail users went up by 50 paise to R47.65 a litre in Delhi.

Bulk users, which consume around 17.77% of the total diesel sales in the country, will pay R56.88 a litre in Delhi. The government has refused to call its January 17 decision deregulation even though it has permitted oil companies to raise diesel prices by the same quantum from time to time till the over R9 per litre loss on the fuel is wiped out.

Moily said diesel and petrol had been deregulated by the BJP-led NDA government in 2002, but the UPA government had continued to subsidise diesel, the nation’s most consumed fuel. “This (deregulation) has been going on even during the days of the NDA,” he said. “(There were demands that) there should be deregulation of diesel and this is the only commodity where we have the regulations.”

Asked about the impact of the decision on railways, Moily said it will “largely” have no impact as bulk buyers purchase other inputs and fuels at commercial rates. “They are all running commercially and, ultimately, they have to find their own budget,” he said.

Railways buy 2.428 million tonnes of diesel annually and will have to shell out R2,727 crore more for buying the fuel at market price. State transport undertakings would have to shell out an additional R2,462 crore for buying 2.192 million tonnes of diesel at market price. Defence, the third-largest bulk buyer, would pay an additional R299 crore for purchase of their annual 267,000 tonnes of diesel.

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