Loss on diesel sales falls to Rs 5.49 per litre

The loss on sale of diesel has been trimmed by 44 paise to Rs 5.49 a litre after appreciation in the value of the rupee made imports cheaper.

State-owned firms Indian Oil Corporation, Bharat Petroleum Corp and Hindustan Petroleum Corp are losing Rs 5.49 on every litre of diesel sold, down from Rs 5.93 a litre in the first half of the month, an official statement said.

The loss, which is made good through government subsidy, has declined since March as the rupee strengthened against the dollar and global oil prices softened.

Oil firms lost Rs 8.37 a litre in the first half of March, which came down to Rs 7.16 in the second fortnight. The decline continued in April.

The rupee has strengthened to 60.07 to a dollar from 60.90 previously, resulting in a fall in the under-recovery or revenue loss to Rs 5.49, the statement said.

Besides diesel, oil firms are losing Rs 34.43 per litre on kerosene sold through the public distribution system, down from Rs 36.34 a litre last month.

On cooking gas, the revenue loss has come down to Rs 506.06 per 14.2-kg cylinder from Rs 605.80

last month.

The fall in under-recovery has meant that monthly diesel price hikes have been put on hold.

Oil firms did not effect the price hike on April 1 on the grounds that the loss on sales of the fuel has fallen to less than Rs 6 a litre.

IOC said on March 31 there was no need to increase rates further because an expert committee headed by Kirit Parikh had suggested that the government should provide a subsidy of Rs 6 a litre on diesel.

Since the oil firms are guaranteed Rs 6 a litre subsidy, they decided not to raise the rates any further.

The Cabinet had in January last year decided that diesel prices should be raised by 40-50 paise a litre every month until losses on the fuel are wiped out.

Diesel prices have risen by a cumulative Rs 8.33 a litre in 14 installments since January 2013.

"Oil marketing companies, effective April 16, 2014, are now incurring combined daily under-recovery of about Rs 337 crore (Rs 3.37 billion) on the sale of diesel, PDS kerosene and domestic LPG.

This is lower than Rs 342 crore (Rs 3.42 billion) daily under-recoveries during previous fortnight effective April 1," the statement said.