Oil Companies Hold 35 Paisa Cut In Diesel, 55 Paise Hike In Petrol

NEW DELHI: Diesel prices, for the first time in over 5 years, should have been cut by 35 paisa on falling global rates but oil companies have decided to hold on to the rates pending a government decision on deregulation.

Under-recovery or the difference between retail price and its imported cost on diesel was 8 paisa per litre in the first half of September. The under-recovery in the second half has turned into over-recovery or profit of 35 paisa per litre.

"Naturally, when there is an over-recovery or profit, rates should have been cut but oil companies are holding the price line as they await a clear decision from the government on diesel price deregulation," an official said.

This would have been first reduction in diesel rates in over five years. Diesel rates were last cut on January 29, 2009 when they were reduced by Rs 2 a litre to Rs 30.86.

Since then rates have only increased as international oil prices climbed. Since January 2013, diesel prices have been raised by up to 50 paisa a litre every month to eliminate under-recoveries.

The official said Oil Minister Dharmendra Pradhan is in Vietnam on an official tour and a deregulation or freeing of the fuel pricing from government control will be discussed upon his return.

Deregulation would give oil companies powers to change rates in tandem with cost like they do in case of petrol since June 2010.

Also Read: Deregulate Diesel Prices At The Earliest: Rajan