PSU OMCs rally as Govt partially deregulates diesel prices

Indian Oil Corporation (up 3.71%), BPCL (up 3.22%) and HPCL (up 5.23%) edged higher.

The BSE Sensex was up 126.77 points, or 0.64% to 19,944.40

The government today, 17 January 2013 partially decontrolled diesel prices, giving authority to the marketing companies to change diesel prices by a small margin from time to time as per market conditions. The Cabinet announced that there will be no change in the prices of diesel, kerosene and LPG and that the cap on subsidised LPG cylinders will be raised from six to nine from April 2013.

The Oil Ministry had earlier this month made a proposal to Cabinet to raise diesel prices and increase the number of subsidised LPG cylinders available to households to nine a year from the current cap of six.

The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas after trading hours on Wednesday, 16 January 2013, said that the under-recovery on High Speed Diesel (HSD) applicable for 2nd fortnight of January 2013, effective 16 January 2013, has increased to Rs 9.60 a litre from Rs 9.03 a litre for the 1st fortnight of January 2013. In case of Domestic LPG and PDS Kerosene the under-recoveries for January 2013 (effective 1 January 2013) are Rs 490.50 per cylinder and Rs 30.64 per litre, respectively. PSU OMCs are currently (effective 16 January 2013) incurring daily under-recovery of about Rs 384 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.

India, which imports over 80% of its fuel needs, had liberalised petrol prices in June 2010.

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