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Diesel prices hiked by Rs1.09 a litre effective midnight

LiveMint logoLiveMint 12-05-2014 PTI

New Delhi: Diesel prices have been hiked by `1.09 per litre, excluding state levies, with effect from Monday midnight.

Oil PSUs Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) had on 1 April skipped raising diesel rates as per the January 2013 decision of the cabinet of small monthly raises, on the plea that revenue losses on the fuel have dropped below `6 a litre. They again did not raise rates on 1 May even though the losses had climbed to `6.80 per litre.

Sources said the ministry had at the time of shelving the April hike stated that an expert committee headed by Kirit Parikh recommended that government provide a fixed subsidy of `6 per litre on diesel and so there was no need to raise rates if the revenue losses were below this threshold. While the government is yet to accept the Parikh panel recommendations, the oil ministry, wary of the political fallout due to the unpopular move to raise prices, approached the poll watchdog towards March-end seeking its nod to keep monthly raises in abeyance.

Sources said EC did not respond to the ministry’s request for over a month, a development that was cited to yet again for not raising fuel rates on 1 May even though losses had surpassed the `6 a litre threshold. EC has now told the ministry that since the revenue loss on the fuel is currently `6.80 per litre, it is for the oil ministry to take a decision on raising rates.

The cabinet had in January last year decided that diesel prices should be raised by 40-50 paise a litre every month until losses on the fuel are wiped out.

Diesel rates had risen regularly barring just one time. Oil companies skipped raising diesel prices in April 2013, when assembly elections were held in oil minister M. Veerappa Moily’s home state Karnataka. However, they made up by hiking diesel prices by 90 paise in the following month. Sources said the oil companies had decided not to raise petrol prices on 1 May even though rupee depreciated against the US dollar, thereby making imports costlier.

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