Loss on diesel sale rises to ₹1.78/ltr, price decontrol may be delayed

NEW DELHI: Rising global crude oil prices and fall in the value of the rupee against the US dollar may once again delay the government’s plans to deregulate diesel prices by the middle of 2014-15.

An official statement said the loss has now widened to ₹1.78 per litre based on average international oil price and foreign exchange rate in the first half of the month.

Losses or the gap between retail selling price and the cost of import, had dipped to an alltime low of ₹1.33 a litre in the first half of August.

Diesel prices are raised every month by up to 50 paise per litre to trim the losses. Rates were last raised on August 1 after which losses had dipped to ₹1.33.

Rates have cumulatively risen by ₹11.24 per litre in 18 instalments since January 2013 when the previous UPA government had decided on small monthly hikes.

The government had in January 2013 decided to raise diesel prices in small doses of 40-50 paise per litre every month till the losses, which are made good through government subsidy, are completely eliminated.

Officials said the monthly increases had trimmed losses to less than ₹3 per litre in May last year before a fall in rupee value led to losses on diesel sale widening to ₹14.50 per litre in September 2013. Since then, monthly increases have continued and the rupee has strengthened.

Losses have fallen rapidly since March as the prospect of a stable government under Prime Minister Narendra Modi helped the rupee gain against the dollar.