With the Presidential elections behind, the pressure is mounting on the Government to hike diesel prices. While there is consensus on the issue within the Government, getting the allies on board is the tricky part, Petroleum Ministry feels.
“There is an absolute consensus on the issue…but, we will have to speak to the allies. If, they (allies) are terribly disappointed with 70 paise raise in petrol price, they would raise hell if diesel prices are increased,” a senior Petroleum Ministry official said.
The Ministry is pitching for diesel price increase, as crude oil and product prices are going up and the rupee is hardening. “Every tactic will fail when you take a course to increase, while a decrease is hardly noticed,” the official said.
August will see the Vice-Presidential elections and Parliament session beginning from the eighth of the month, “so political implications of any price increase are strong,” the official hinted.
The Ministry has, however, not fixed any definitive timeline for a proposed increase. The Petroleum Minister, Mr S. Jaipal Reddy, is yet to have in-depth discussions with the Congress leadership on the issue and discussions with allies have also not started.
The Ministry does have the freedom to decide on the quantum of hike, but it is yet to firm up any numbers, the official said.
Retail prices of diesel, kerosene sold under the public distribution system, and domestic LPG have remained unchanged since June 2011, resulting in under recovery of Rs 10.01 litre on diesel, Rs 27.20 litre on kerosene, and Rs 319 per cylinder on domestic LPG.
The companies are looking at an increase of Rs 5-7 a litre on diesel, which is the most consumed fuel.
If the current trend continues, the public sector oil marketing companies are estimated to lose Rs 1,60,000 crore on the three products for the current fiscal.
The under recoveries for the first quarter is estimated to be Rs 47,800 crore, out of this Rs 15,000 crore will be shouldered by the upstream companies – ONGC, Oil India, and GAIL – and Rs 32,800 crore by the Government.