Diesel made costlier by Rs1.09 per litre

State-run oil marketing companies on Monday announced a Rs1.09 per litre increase in the retail price of diesel effective midnight of Monday.

The decision to hike diesel prices by Rs1.09 per litre follow the Election Commission's (EC) rejection of the oil ministry's proposal to shelve the cabinet decision of raising its rate in small monthly doses because revenue losses on the fuel had dropped below Rs6 per litre two months ago, Indian Oil Corporation said in a release.

The government had, through an order dated 17 January 2013, authorised OMCs to increase the retail selling price of diesel within a small range every month until further orders. Since then, retail diesel prices have been revised every month.

As the proposed change has not been accepted by the Election Commission, the OMCs are required to effect both the price increases together.

Further, as a result of non-increase of prices since 1 April 2014, there is a small impact which is also required to be passed on to the customer and hence the increase of Rs1,09 per litre, Indian Oil Corp said in its release

Even after the proposed price increase, diesel would still be left with an under-recovery of Rs5.71 per litre (based on pricing cycle applicable for the first fortnight ended 14 May), Idian Oil Corp said.

The actual increase in diesel prices would vary from state to state depending on local duties.  Diesel would now cost Rs56.71/litre in Delhi, Rs65.21/litre in Mumbai, Rs61.38/litre in Kolkata and Rs60.50 in Chennai.