With an over 12% drop in the Indian rupee's value against the US dollar making imports costlier, state-owned oil firms have demanded a one-time steep increase in diesel rates to make for the widening losses.
Losses on sale of diesel at government controlled rates, had dropped to under Rs 3 per litre in May following monthly increases of up to 50 paise a litre. But with the rupee depreciating against the US dollar, the losses have widened to Rs 10.22 per litre.
"We had requested the government for an increase in prices on ad-hoc basis. The decision on the increase rests with the government. The government of India has to take a decision on it. I have no comments on it," IOC Director (Finance) PK Goyal said.
Losses on diesel sales have widened to Rs 10.22 from Rs 9.29 a litre in the beginning of the month. Besides diesel, the oil companies are losing Rs 33.54 per litre on kerosene and Rs 412 per 14.2-kg cooking gas (LPG) cylinder.
Speaking to reporters after flagging off a biking expedition to Ladakh, Goyal said the total revenue loss or under- recoveries on diesel and cooking fuel was estimated at Rs 80000 crore at the beginning of the fiscal, which have now widened to Rs 140000 crore.
"Rupee has depreciated 12 per cent since April. It was 59.39 to a dollar and today it is 64.10. Rupee depreciating by one against the US dollar adds Rs 8000 crore to our under-recoveries (revenue loss)," he said.
The government had in January allowed oil companies to raise diesel rates by up to 50 paisa per month till such time that the losses on the most consumed fuel in the country are wiped out.
With prices being raised regularly, the losses on diesel had come down to below Rs 3 per litre in May but rupee falling by 12 per cent since April has resulted in the difference climbing to Rs 10.22 per litre.
Oil companies feel 50 paisa increase is insufficient and there should a one-time steep increase to cover for fall in rupee.
Oil Minister M Veerappa Moily had on August 14 stated that oil company suggestion of one-time hike was under consideration but no decision has been taken yet.
"That's under consideration, but we have not yet decided," he said.
Moily, however, said there is no proposal to raise LPG or kerosene rates.
Diesel price was last hiked on August 1 when prices in Delhi went up by 56 paisa (after including local taxes) to Rs 51.40 per litre.
IOC, Bharat Petroleum and Hindustan Petroleum had lost Rs 25579 crore in revenue in the first quarter ended June 30, of which the government made good Rs 8,000 crore by way of cash subsidy.