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Polls end, oil firms raise diesel price

New Delhi, May 12: Diesel prices were raised by Rs 1.09 a litre — excluding state taxes — almost as soon as the marathon nine-round Lok Sabha polls came to an end today.

The hike will come into effect from midnight tonight.

Motorists in Calcutta will have to pay Rs 61.38 per litre, an increase of Rs 1.27 a litre. Petrol prices have been kept unchanged.

Oil marketing PSUs had been raising diesel prices by 50 paise a month since January 17, 2013, as part of a phased decontrol, but the government did not allow them to increase the price for the last two months.

Oil PSUs IOC, BPCL and HPCL had on April 1 skipped a price hike on the plea that the revenue losses on the fuel have dropped below Rs 6 a litre. They again did not raise rates on May 1 even though the losses had climbed to Rs 6.80 per litre.

Officials said the oil ministry had cited an expert panel report to justify their decision not to raise prices in April.

The panel, headed by noted economist Kirit Parikh, had recommended a subsidy of Rs 6 per litre on diesel. Since the losses on diesel were less than Rs 6 per litre in April, the government decided against a hike.

While the government is yet to accept the Parikh panel recommendations, the oil ministry, wary of the political fallout because of the unpopular move to raise prices, approached the Election Commission towards the end of March seeking its approval to keep the monthly hikes in abeyance.

The poll watchdog did not respond to the ministry’s request for over a month, leading to another pause in raising fuel rates on May 1 even though losses had surpassed the Rs 6-a-litre threshold.

The EC has now told the ministry that since the revenue loss on the fuel is Rs 6.80 per litre it is for the oil ministry to decide on raising the rates.

“Even after the proposed price increase, diesel shall still be left with an under-recovery of Rs 5.71 per litre,” IOC said.

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 been raised 14 times since January 2013 by Rs 8.33 a litre in aggregate.

FUEL FACTOR

  • Diesel prices up Rs 1.09 a litre, excluding state taxes
  • Petrol prices remain unchanged
  • Diesel prices raised 14 times since January 2013 by Rs 8.33 a litre in aggregate
  • Oil firms lost around Rs 139,869 crore in revenues on the sale of diesel, LPG and kerosene last fiscal
 
 
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