Diesel under-recovery drops to 8 paise a litre

The under-recovery on diesel for national oil marketing companies (OMCs) is down to a wafer thin 8 paise a litre, a pattern that could soon bring relief to consumers from the 50-paise-a-fortnight upward revision. On Monday, the Petroleum Planning and Analysis Cell (PPAC) of the Petroleum Ministry said the under-recovery, applicable for the first fortnight of September, is Rs.0.08/litre, down from Rs.1.78/litre during the second fortnight of August.

The lowest under-recovery so far, as a result of frequent increase in the pump price, stable global oil prices besides rupee-dollar exchange, comes at a time when the government is considering de-regulating diesel prices. It has already done so for petrol, which means no under-recovery for the companies and also occasional reduction in price for the consumers.

Much of the decline in under-recovery could be achieved after the government, in mid-January last year, granted the companies freedom to revise prices every fortnight in doses of 50 paise. The pump prices soared by over Rs.10 a litre during the period, leading to protests by transporters, railway freights going up and car manufacturers reporting less demand for diesel cars. Diesel prices in Delhi went up from Rs.47.65 in January 17, 2013, to Rs.58.97 after the revision on Sunday.

PPAC said the OMCs were incurring combined daily under-recoveries of about Rs.195 crore on the sale of diesel and kerosene sold through the public distribution system and domestic LPG. This is lower than Rs.230 crore daily under-recoveries during the previous fortnight. The under-recovery on domestic LPG during this fortnight was put at Rs.427.82 (Rs.447.87) per 14.2 kg cylinder and Rs.32.67 (Rs.32.98) per litre of PDS kerosene.