After Petrol Price Cut, Modi Government Set To Reduce Diesel Rates

Due to fall in international prices, the over-recovery on diesel sale for the state-owned oil marketing companies has shot up to Rs 3.56 per litre. However, the Narendra Modi-led government at the Centre is soon expected to take a decision on bringing down diesel price by close to Rs 2.50 a litre.

Diesel prices increased from Rs 1.90 per litre during October 1, 2014 to Rs 3.56 per litre from October 16.

While the new government has been regularly making efforts to bring down petrol prices, decision on slashing diesel prices has not yet taken place. Possibly, the delay was due to model code of conduct in view of state elections in Maharashtra and Haryana, which ended on Wednesday.

State owned companies were able to cut petrol prices because the decision to deregulate petrol was taken long back in 2010. On January 17, 2013, the central government only allowed a monthly hike of 40-50 paise per in diesel price in order to wipe out the under-recovery. But now the Cabinet will have to act to bring down diesel prices.

According to Oil Minister Dharmendra Pradhan, “The government will take the right decision at the right time. You are aware, election code of conduct is in place so will decide on the issue at the right time.”

Notably, under-recoveries continue on kerosene and LPG sale. In the case of PDS kerosene and domestic LPG, the under-recoveries for the second fortnight of October 2014 will be Rs 31.22 per litre (Rs 32.67 per litre in last month) and Rs 404.64 per cylinder (Rs 427.82 per cylinder in last month).

Looking at the sale of PDS kerosene and domestic LPG, state-owned fuel retailers — IOC, BPCL and HPCL are losing about Rs 139 crore a day on sale of PDS kerosene and domestic LPG. This is lower than Rs 156 crore daily under-recoveries during previous fortnight.
(Image: Times of India)