Even as the oil marketing companies bleed, the government has yet again put off a decision to raise diesel prices. A meeting of the 'empowered group of ministers' (EGoM) that was convened on 22 December to take a stand on fuel pricing has now been postponed.
A Rs2 per litre hike in diesel prices was on the agenda for the EGoM meet (under the inevitable chairmanship of finance minister Pranab Mukherjee), but it has been put off, apparently due to the unavailability of a couple of members.
Indian Oil Corp (IOC), the biggest of the three state-owned oil marketing companies (OMCs), is losing Rs118 crore a day in revenue on selling diesel, liquefied petroleum gas (LPG) for domestic use, and kerosene below their import cost, a company official told sections of the media today.
"We are losing very heavily on diesel after international oil prices firmed up to $90 a barrel," he said.
Oil prices have risen as freezing weather in the upper northern hemisphere has increased energy demand for heating. The spurt has resulted in the difference between domestic retail and international benchmark prices widening.
While the government deregulated petrol prices in June this year, the OMCs, including IOC, are forced to continue selling diesel, domestic LPG and kerosene below cost. All of India's three oil marketing companies are state-owned.