After a volley of recent fuel price hike in diesel and cooking gas prices, the government on Tuesday ruled out any further increase in diesel and cooking fuel prices even as state-owned oil companies claim to be selling fuel at rates lower than cost of production.
“I am not so courageous,” said petroleum and natural gas minister S Jaipal Reddy at the Economic Editors’ Conference.
When asked if the government will consider raising prices considering the humongous Rs. 167,000 crore revenue loss on diesel, cooking gas (LPG) and kerosene sale expected this fiscal, Reddy ruled out any immediate increase in the prices of the two fuels.
The government had in September hiked diesel price by a steep Rs. 5.62 per litre and restricted the supply of subsidised LPG to 6 cylinders per household in a year.
Oil PSUs lose Rs. 11.65 per litre on diesel, Rs. 33.93 on kerosene sold through PDS and Rs. 468.50 per 14.2-kg domestic cooking gas cylinder.
“Even after these recent increases, the under-recoveries (or revenue loss) this financial year will be higher than they were last year,” Reddy said, adding that oil firms are projected to lose Rs. 167,415 crore this fiscal as compared to Rs. 138,541 crore revenue loss in 2011-12.
“There is a need to raise prices,” he, however, acknowledged. Even on petrol, a commodity which the government had freed from its control in June 2010, oil firms have lost Rs. 2,600 crore in the first six months as they could not raise rates in line with costs.
Oil firms have cut petrol price by 56 paisa from Tuesday, and Reddy said it was totally up to them to decide the next move.