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Losses on sale of diesel at government-controlled rates have hit a record Rs 12.56 a litre even as state-owned firms look at ways to mitigate a spurt in the cost of raw material (crude oil).
Indian Oil Corporation (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) are selling diesel, domestic LPG and kerosene way below cost as the government battles to control inflation.
“Diesel is being sold at a discount of Rs 12.56 a litre to its imported cost,” an industry official said.
The Finance Minister, Mr Pranab Mukherjee, had in his Budget for 2011-12 ignored calls for a reduction in customs and excise duty to contain the impact of a spurt in global crude oil prices, which have touched a two-year high of $110 a barrel.
The Oil Minister, Mr S. Jaipal Reddy, had last week stated he would take the case for an auto fuel price hike to an Empowered Group of Ministers (EGoM) headed by Mr Mukherjee after the Budget.
The retail price of diesel would have to be hiked by Rs 12.56 a litre if the Government was to implement its June, 2010, decision of freeing pricing of the most-consumed fuel from its control.
The three state retailers are together losing over Rs 237 crore a day in revenue on the sale of diesel below its imported cost.
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