New Delhi, Aug. 31: Petrol prices were hiked by Rs 2.35 a litre and diesel by 50 paise per litre, excluding state levies, because of the depreciating rupee and a spike in crude prices.
The deeper shock, however, is yet to come as the diesel price, which is a controlled commodity, is likely to be increased further by Rs 3 to Rs 5 per litre to soften the financial losses of the state-owned oil firms and reduce the subsidy payout by the government.
Motorists in Calcutta will have to pay Rs 81.57 per litre of petrol and Rs 56.33 for a litre of diesel from midnight tonight.
Non-subsidised LPG will now cost Rs 967, up Rs 60.
“Consequent to the last price increase, the exchange rate has deteriorated sharply — Rs 59.49 to Rs 65.70 to a dollar in one month — necessitating this price increase. The exchange rate continues to be extremely volatile. Also the geopolitical situation in the West Asia is leading to pressure on international oil prices as well,” IOC said in a statement.
The state-owned firm said it continued to sell diesel at a loss of Rs 12.12 per litre, kerosene at Rs 36.83 per litre and domestic LPG at Rs 470 per cylinder.
The Cabinet Committee on Political Affairs in January decided to increase the diesel price in the range of 40 paise to 50 paise a litre per month (excluding VAT), sell diesel to bulk consumers at market price, and cap subsidised domestic LPG cylinders at nine annually.
However, the petroleum ministry is keen that diesel prices be hiked by Rs 3 to 5 per litre as a one-time exemption because of the spike in global crude prices and the depreciating rupee value and its impact on the finances of oil firms.
Indications are that diesel may get costlier by Rs 3-5 a litre, kerosene by Rs 2 a litre and LPG by Rs 50 a cylinder.
Oil minister Veerappa Moily has written to Prime Minister Manmohan Singh and finance minister P. Chidambram, urging them to take corrective steps to check the deteriorating financial health of oil marketing companies because of mounting under-recoveries (loss suffered by companies) for selling these products at a controlled price.
“Consistent rupee depreciation has a severe impact on the under-recovery of the oil marketing companies and consequently on their financial health.
“If the present position persists, the total under-recovery would reach a level of Rs 1,80,000 crore in the current financial year compared with Rs 1,61,000 crore during the financial year 2012-13,” Moily said in letters separately written to the Prime Minister and finance minister.