Diesel subsidy costing oil marketing companies Rs6.8 a litre, says ministry

The under-recovery on diesel by India's state-owned oil marketing companies for the fortnight beginning 1 May has been estimated at over Rs6.80 per every litre sold, the petroleum ministry said today, even as latest reports said the OMCs are expected to announce a major fuel price hike.

This compares to the under-recovery of Rs5.49 per litre during the second fortnight of April, the petroleum ministry said in a statement.

"In the case of PDS kerosene and domestic LPG, the under-recoveries for the first fortnight of May 2014 will be Rs33.85 per litre (Rs34.43 per litre in last fortnight) and Rs449.13 per cylinder (Rs506.06 per cylinder in last fortnight) respectively," the ministry statement said.

"Oil marketing companies, effective 16 April 2014, are now incurring combined daily under-recovery of Rs342 crore on the sale of diesel, PDS [public distribution system] kerosene, and domestic LPG [domestic cooking gas]. This is higher than the Rs337 crore daily under-recoveries during previous fortnight."

In January 2013, the union government decided that diesel prices should be raised in small doses of 40-50 paise a litre every month till losses on the fuel are wiped out.

The state-administered diesel price has risen by a cumulative Rs8.33 a litre in 14 instalments since the decision.

The basket price of Indian crude per barrel (159 litres to a barrel) as on the last trading day (Wednesday) stood at $105.84, or Rs6,386.39, at the exchange rate of Rs60.34 to a dollar.