'Diesel prices to rise 40-50 paise a month'

Last Updated: Sat, Feb 02, 2013 04:22 hrs

Petroleum Minister M Veerappa Moily on Friday said diesel prices would be raised 40-50 paise a litre every month until under-recoveries on the fuel were completely wiped out.

“Until further orders, oil marketing companies can increase it (diesel prices) by 40-50 paise (a litre) every month,” he told reporters here.

On January 17, the government had decided to move towards deregulating diesel prices. It had empowered state-owned oil companies to raise prices in small doses every month.

Currently, diesel is sold at a loss of Rs 10.8 a litre. On January 17, oil firms had raised diesel prices by 45 paise. After including value-added tax, the increase in Delhi amounted to 50 paise. Currently, diesel prices in Delhi stand at Rs 47.65 a litre.

Moily, however, didn’t specify when the oil firms would effect the second price rise. He said he had heard states such as Gujarat and Tamil Nadu had asked their public transport fleets to refuel at petrol pumps, not buy diesel from oil firms directly. This was aimed at avoiding paying the market price mandated for them. “We need to look into that (issue). I have also heard about it. We are seized of that matter,” he said.

On dual pricing for diesel, Moily also said fishermen would be exempted from the category of bulk customers.

To save an estimated Rs 12,907 crore in annual subsidy, the recent retail price rise for diesel was coupled with a move to charge bulk consumers such as the armed forces, railways and state transport undertakings market prices, about Rs 10 a litre higher than retail rates. Fishing communities from many states had said they shouldn’t be considered bulk customers.

“Supply to fishermen would be treated as retail supply. They will be supplied at the price applicable to other retail outlets of oil marketing companies with immediate effect,” Moily said.

“The idea behind denial of subsidy to bulk customers is these customers can afford to bear the burden of the market price on their own or pass on the burden to end-customers,” he added.

More from Sify: