Gurgaon: Oil Minister S Jaipal Reddy on Tuesday ruled out deregulation of diesel prices and said he had demanded that the government compensate state-owned oil firms for the losses they made on not raising prices of petrol.
"Deregulation of diesel in entirety is very difficult proposition but at appropriate time we may look at reducing subsidy on diesel. But that time hasn't come," he said.
State-owned oil companies will need to raise diesel price by Rs 11.35 per litre if the government was to free its pricing like it was done in case of petrol in June 2010.
Even petrol rates have not moved in tandem with cost since its deregulation and state-owned oil firms have refrained from raising rates since December in view of assembly elections in five crucial states like Uttar Pradesh.
Oil firms lose Rs 3-3.20 a litre on the fuel currently.
Reddy firmly said there was no proposal at the moment to raise diesel rates.
He, however, supported oil companies demand for being compensated for revenue losses incurred on selling petrol below imported cost.
"We have taken the issue up with finance ministry. We want finance ministry to provide for losses incurred on petrol as well," he said.
Currently the government makes good only the losses incurred on diesel, domestic LPG and kerosene.
On Monday, Indian Oil Corp (IOC) Chairman RS Butola had stated that his company had lost about Rs 443 crore since the last revision in petrol price on December 1.
IOC lost about Rs 1,277 crore in first nine months of current fiscal and another Rs 360 crore after that, Butola had said.
"Since we are unable to pass on the required increase in petrol prices, we have asked the government that losses be made good by way of cash subsidy," he said.
Petrol prices were last revised on December 1 when they were cut by Rs 0.78 per litre to Rs 65.64 per litre in Delhi.
Besides petrol, the state-owned oil firms lost Rs 11.35 per litre on diesel, Rs 28.76 a litre on kerosene and Rs 378 per 14.2-kg domestic LPG cylinder. IOC alone is losing Rs 239 crore per day on sale of these three products and the industry (IOC plus Bharat Petroleum and Hindustan Petroleum) currently lose Rs 445 crore per day.
Butola had stated that last fiscal oil marketing companies were asked to absorb 8.82 per cent of the revenue loss on selling diesel, domestic LPG and kerosene as the rest was made good by government's cash doleout and assistance from upstream firms like ONGC. This year, this share has gone up to nearly 16 per cent.
For the first nine months, IOC absorbed Rs 8,507 crore of revenue loss.
The three retailers are projected to end the fiscal with close to Rs 136,000 crore of revenue loss on diesel, domestic LPG and kerosene.
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