With polling for the Lok Sabha elections ending on Monday, oil marketing companies (OMCs) will increase diesel prices by Rs 1.09 a litre, exclusive of tax, from midnight.
Since January 17, 2013, OMCs have been raising diesel prices by 50 paise a month, as part of a phased decontrol. But the government did not allow them to increase prices for the past two months. Instead, it referred the matter to the Election Commission, for a permission to freeze phased diesel decontrol.
"As the change has not been accepted by the Election Commission, the OMCs are required to effect both the price increases together. Further, as a result of non-increase of prices since April 1, 2014, there is a small impact which is required to be passed on in the retail price of diesel," Indian Oil Corporation (IOC) said in a press statement.
On March 31, IOC had said, "A decision on revision in retail price for diesel shall be taken on receipt of further advice from the government." For the three government-controlled OMCs - IOC, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - revenue loss on diesel stands at Rs 5.71 after the price rise. It had risen to Rs 6.8 a litre from Rs 5.93 a litre at the beginning of April.
Indian Oil had on March 31 said as the diesel revenue loss had fallen below Rs 6 a litre, the interim subsidy cap recommended by the expert group under Kirit Parikh, the issue of monthly price rises was being considered by the government and had been referred to the Election Commission.
Last financial year, the three OMCs together recorded a revenue loss of Rs 1,39,869 crore on sale of diesel, liquefied petroleum gas and kerosene, with a net impact of Rs 4,600 crore (after taking into account government subsidy and upstream discounts). Though the phased decontrol of diesel prices has been stalled, the OMCs had reduced petrol prices twice last month - by Rs 0.9 a litre and Rs 0.85 a litre. But when an increase was expected at the end of April, the companies refrained from this.