Oil firms refrain from hiking diesel prices, but may raise it soon over revenue loss.

NEW DELHI: Oil firms have spared the consumers from the monthly diesel hike, but the relief is only temporary as the government did not want to spoil the New Year party.

Companies are keen to raise the price soon. Companies are suffering a huge revenue loss on the sale of diesel. The pump price is Rs 9.74/litre lower than the market rate, which is substantial, even though the gap is slightly smaller than the level of Rs 10.48 per litre two weeks ago. Industry executives say the government nudged them to avoid the increase in diesel prices, but oil ministry officials denied any role in this.

Officials, however, said they appreciated the postponement as a "goodwill gesture" for the consumer. "The petroleum minister is always under political pressure against any hike in fuel prices, but he has given full freedom to oil marketing companies to raise prices by 50 paise a month as per the Cabinet decision. Despite internal pressures he did not stop them from raising prices during the recent assembly elections," a senior oil ministry official said requesting anonymity.

The Cabinet, on January 17, 2013, gave limited freedom to state fuel retailers to raise diesel prices in small doses every month until pump prices are aligned with market rates. Despite the limited pricing freedom, which saw diesel prices soared by over 14 per cent, the gap between the pump and the market rates failed to drop in last one year because the rupee depreciated and international prices remained firm. India imports about 80% crude oil it processes and pays in the dollar.

Oil companies' revenue loss on the fuel was about Rs 9.03 per litre a year ago, when diesel was sold at Rs 47.15 a litre. The current price of the fuel is Rs 53.78 per litre. Companies recently raised non-subsidised cooking gas prices by about 22 per cent at Rs 1,241 per cylinder from Rs 1,021 in Delhi. "One of the reasons for the steep hike is sudden jump in winter demand of liquefied petroleum gas in Europe," an executive said.

Source : timesofindia.indiatimes.com