Oil min considering one-time diesel price hike to bridge losses of OMCs

A one-time diesel price hike to bridge under-recoveries of oil marketing companies is under consideration, Oil Minister Veerappa Moily told CNBC-TV18 today.

The ministry is looking at a one-time price hike of around Rs 2-3/litre, the channel reported.

The under-recovery or losses suffered by OMCs is Rs 10/a litre as of now.

Another proposal under consideration is to allow oil marketing companies to increase diesel prices by more than 50 paise a month.

However, these are just proposals and no decision has been taken yet, Moily said.

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The minister, however, clarified that prices of LPG and kerosene will not be increased.

This is a revision of his statement in February when he said that diesel prices will be hiked by only 40-50 paise per litre every month until ’losses on the nation’s most used fuel are completely wiped out’.

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The government had on January 17 deregulated diesel prices from state control and gave powers to state-owned oil firms to raise prices in small measures every month until all of their losses are wiped out. However, with the unprecedented depreciation of the rupee against the dollar and the global crude oil prices ruling high, the government is struggling to deal with an increasing oil subsidy burden. Earlier, there were reports that the government may have to allow the companies to raise diesel prices by a higher quantum every month.

Moily also said that he has informed the Finance Ministry that this is not the right time for IOC disinvestment.