New Delhi: An Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee may meet on 22 December to decide on raising diesel prices by Rs1-2 a litre in the backdrop of global crude rates climbing to near $90 a barrel.
“The meeting of EGoM has been tentatively scheduled for the afternoon of 22 December,” a senior government official said.
With international crude oil having climed to near $90 a barrel, the gap between domestic retail price and their production cost has widened, necessitating the review.
State-run Indian Oil Corp (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) currently sell diesel at Rs4.71 a litre lower than its cost.
“The oil marketing companies are losing about Rs75 crore per day on diesel sale and a view has to be taken on raising fuel prices,” he said. “Freeing of diesel price (from government control) is not possible at this juncture and at best a hike of Rs1-2 a litre is likely to be approved.”
The government had on 26 June decontrolled petrol price and had decided to make diesel prices market-based in due course.
While petrol price has risen four times since then, diesel rates have remained unchanged. Another hike in petrol price by oil marketing companies is likely in a day or two to make up for the rise in crude prices.
The official said the three state firms lost Rs11,153 crore in revenues on diesel sales during April-September this fiscal and without any change in price the revenue loss is projected to be Rs36,540 crore.
IOC, BPCL and HPCL also sell domestic LPG and kerosene below cost and the combined revenue loss for the full fiscal is projected to be around Rs65,839 crore.
The official said international crude oil (raw material for making petrol and diesel) prices were around $72-74 per barrel in June when the government freed petrol price. Since then crude has climbed to near $90 per barrel.
The 26 June decision had resulted in a Rs3.50 a litre hike in petrol prices in Delhi.
At that time, the government decided to raise the diesel price by an ad-hoc Rs2 per litre, even though the difference between the domestic retail price and imported cost of the fuel was almost twice of that.
Besides diesel, the oil retailers lose Rs272.19 on the sale of every 14.2-kg LPG cylinder and Rs17.72 per litre of kerosene.