Diesel, LPG prices likely to go up from next month

After petrol, price of diesel, LPG and kerosene are likely to be hiked next month when a ministerial panel headed by Finance Minister Pranab Mukherjee meets to decide on passing rise in crude rates to consumers.

"The Empowered Group of Ministers (EGoM) has been scheduled to meet on June 9," a top oil ministry official said here today. "Price of diesel, LPG and kerosene will have to go up (to cover for rise in input crude oil cost). What EGoM has to decide is by how much," the official said.

State-owned oil firms had earlier this month hiked petrol price by a steep Rs 5 per litre and oil ministry may push for a Rs 4 per litre increase in diesel and at least Rs 20-25 per 14.2-kg cylinder hike in domestic cooking gas (LPG) rates. 

Kerosene price hike too is on the cards. 

"There is no escaping this time... Nothing can be treated as sacred," the official said stressing that rates of all three commodities will be hiked. EGoM was originally scheduled to meet on May 11, a day after polling in West Bengal ended but the panel meeting was postponed and has now been scheduled for June 9.

"Public sector oil companies are losing close to Rs 500 crore per day on selling diesel, domestic LPG and kerosene at government controlled rates. We cannot continue with this for long," the official said.

Oil companies are losing Rs 16.49 on sale of every litre of diesel at current price of Rs 37.75 per litre in Delhi. Besides, state oil firms lose Rs 29.69 a litre on kerosene and Rs 329.73 per 14.2-kg domestic LPG cylinder.

The rates of the three commodities were last hiked in June 2010 when crude oil was ruling at $72 per barrel. The basket of crude oil India buys averaged $110.55 a barrel this month. The government had on June 25 hiked prices of diesel by Rs 2 a litre, LPG by Rs 35 a cylinder and the poor man's cooking fuel kerosene by Rs 3 a litre.

This hike was only a fraction of the desired increase to bring domestic price on par with international rates.

"Without an immediate price hike, oil companies will lose a whopping Rs 2,00,000 crore in revenue this fiscal. The government will have to find ways to make up for these as oil companies will soon be left with no money to import oil," he said.

Though Indian Oil, Bharat Petroleum and Hindustan Petroleum had been given freedom to decide on retail selling price of petrol, they informally consulted oil ministry on every revision. The three have not revised rates since January due to the assembly elections in West Bengal, Tamil Nadu, Kerala and Puducherry.

A day after state assembly results, the firms on May 14 hiked petrol price by Rs 5 per litre which was less than half of Rs 10.50 a litre increase needed to cover for cost of crude oil, which had touched a two-and-half year high of $110 per barrel. a