No move to deregulate diesel prices yet: Deora

The government is not considering making prices of diesel fully market-determined as yet, a move which would have resulted in a hike of Rs 3.43 per litre of the fuel, Oil Minister Murli Deora said in Parliament today.

The government had freed petrol prices from its control in June and announced that diesel rates would also be deregulated in due course of time.

State-owned Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp sell diesel at a rate which is Rs 3.43 per litre below its imported cost, he said.

"As regards diesel, government has taken a decision 'in principle' that the price of diesel will be made market- determined," Deora said without giving a timeframe for doing so.

The June 26 decision had resulted in a Rs 3.50 a litre hike in petrol prices in Delhi. At that time, the government decided to raise the diesel price by an ad-hoc Rs 2 per litre, even though the difference between the domestic retail price and imported cost of the fuel was almost twice that.

Since then, diesel rates have not been changed, while the price of petrol has changed five times since then.

Deora said during April-September, 2010, oil marketing companies lost a revenue of Rs 31,367 crore on selling fuel below cost.

"Of this, Rs 10,456 crore have been compensated by the public sector upstream companies through price discounts on crude oil and products. Ministry of Finance has confirmed a budgetary support of Rs 13,000 crore," he said.

The budgetary support was less than the Rs 15,683.30 crore that the oil ministry had sought to cover for the public sector oil companies' revenue losses in the first half of the current fiscal, he added.

Besides diesel, the oil retailers lose Rs 209.94 on the sale of every 14.2-kg LPG cylinder and Rs 15.71 per litre of kerosene.