Oil Minister M Veerappa Moily said while there was no proposal with him "just now" to raise diesel prices, the depreciating rupee was a matter of concern. (Agencies)
With the rupee falling past the 66-mark against the dollar and closing at 66.24 on Tuesday, state-owned oil companies have to pay more to buy crude from abroad. If retail fuel prices are not raised by a commensurate level, the difference has to be borne by the government.
"I have not thought of increasing (diesel) prices as of just now...future I can't say," Moily told reporters here.
Losses on diesel sales at government-controlled rates have widened to Rs 10.22 per litre from Rs 9.29 a litre at the beginning of the month and less than Rs 3 per litre in May, even as prices are raised by 50 paise a litre every month.
Oil firms have asked the government for a one-time increase in rates, P K Goyal, Director (Finance) of Indian Oil Corp, the nation's largest fuel retailer, said on Monday.
Besides, the oil companies lose Rs 33.54 per litre on kerosene and Rs 412 per 14.2-kg cooking gas (LPG) cylinder. The revenue loss or under-recovery on diesel and cooking fuel was estimated at Rs 80,000 crore at the beginning of the fiscal and has now widened to Rs 140,000 crore.
Every one-rupee depreciation in the local currency against the dollar adds Rs 8,000 crore to the under-recovery, Moily said.
The government had in January allowed oil companies to raise diesel rates by up to 50 paise per month until losses on the most-consumed fuel in the country are wiped out. Oil companies feel a 50 paise hike is insufficient and there should be a higher, one-time increase to cover for the fall in the rupee.
The price of diesel was last increased on August 1, when prices in Delhi went up by 56 paise (including local taxes) to Rs 51.40 per litre.
IOC, Bharat Petroleum and Hindustan Petroleum lost Rs 25,579 crore in revenue in the first quarter ended June 30, of which the government made good Rs 8,000 crore by way of cash subsidy.
Oil Minister M Veerappa Moily said while there was no proposal with him "just now" to raise diesel prices, the depreciating rupee was a matter of concern.