Diesel prices to go up by Rs 2 next month in India

NEW DELH, Apr 27 (Business Standard): After being left unchanged for more than 10 months, diesel prices may see an increase of around Rs 2 per litre next month, providing marginal relief to the oil marketing companies (OMCs) that incur a loss of Rs 16.10 on selling every litre. Diesel accounts for about 60 per cent of the total under-recovery (revenue loss) that OMCs bear on regulated sale of diesel, kerosene and domestic LPG. The hike in diesel prices is expected to coincide with an increase in petrol where prices could go up to the tune of Rs 3 a litre. Though petrol prices stand decontrolled, companies did not increase prices since mid-January and saw their losses widen to Rs 7 a litre. Senior oil industry executives said the increase of Rs 2 in diesel and Rs 3 in petrol should face no resistance considering the sharp rise in crude oil prices. "Inflation had prompted the government to keep prices under check for most of 2010. In the current calendar year, political environment and Assembly elections have been the main consideration. With elections drawing to an end in early May, we will pass on petrol hike and seek diesel increase," said an oil company official. In June 2010 when the government decontrolled petrol price it said diesel price would also be market-determined. However, it had restricted the increase to Rs 2 per litre.