New Delhi: Despite one of the steepest hike in fuel prices, state-run oil firms will still end the fiscal will a whooping Rs 121,700 crore revenue loss on selling diesel, domestic LPG and kerosene at government rates.
"After taking into account the increase in diesel, domestic LPG and kerosene price as well as cut in customs and excise duty, the three oil marketing companies will see their under-recoveries (revenue loss) come down from Rs 171,140 crore to Rs 121,704 crore for the fiscal," said an official of Indian Oil Corp (IOC), the nation's largest oil firm.

An Empowered Group of Ministers had on Friday approved a Rs 3 per litre hike in diesel price, which after including local sales tax translated into a Rs 3.37 per litre increase
in retail price at Delhi. This steepest raise in diesel rates ever, more than the Rs 3 per litre hike effect in June 2008.

A Rs 50 per cylinder hike in domestic LPG rates equals the increase in the then NDA government led by Atal Bihari Vajpayee had effect in March 2000.

The Rs 2 per litre increase in kerosene rate is the second hike in the price of cooking fuel used by poor in a decade. Last June, kerosene rates were raised by Rs 3 a litre.

IOC Chairman R S Butola said despite the Rs 3 per litre increase coupled with cut in customs or import duty from 7.5 per cent to 2.5 per cent and reduction in excise duty from Rs 4.60 per litre to Rs 2 a litre, diesel is still being sold at a loss of Rs 6.90 per litre.

Similarly, kerosene is being sold at Rs 25.37 per litre loss and domestic LPG at a loss of Rs 331.13 per 14.2-kg cylinder.
The increase had been necessitated at crude oil price continued to rule above USD 110 per barrel as against USD 75 a barrel in June last year, when the last revision took place.

Besides the price hike, the EGoM decided to abolish the 5 per cent import duty on crude oil, and slashed the same on diesel and petrol by 2.5 per cent from 7.5 per cent. Excise duty on diesel could not be cut below Rs 2 per litre as this is the levy which goes for national highway development.

The decision to cut customs duty on petrol also meant that the Rs 1.98 per litre hike needed to level retail prices with their cost would no longer be required, he said.