Petrol, diesel dearer; bigger hike likely

statesman news service
New Delhi, 31 Aug: Petrol price was today hiked by a steep Rs 2.35 per litre, and diesel by 50 paise ahead of a bigger increase in rates that may also include subsidised LPG planned for next month as the falling rupee made imports costlier.
The increase in petrol and diesel prices are exclusive of local sales tax or VAT and are effective from midnight tonight.
Next month, after the Parliament session ends, diesel prices may see a one-time hike of Rs 3-5 per litre, kerosene of Rs 2 and LPG of Rs 50 per cylinder, with oil minister M Veerappa Moily urging Prime Minister Manmohan Singh to take steps to tackle a record Rs 180,000 crore of losses arising from the dipping rupee and surging oil rates.
In the sixth hike since June, petrol price has gone up by Rs 9.17 per litre, excluding VAT.
Diesel price was hiked by 50 paise, excluding VAT, in line with the January decision of the government allowing oil companies freedom to raise prices in small doses every month to wipe out mounting losses. Today’s hike in the eighth since 17 January. The fall in the rupee, around 25 per cent since April, has worsened the situation and oil firms are losing Rs 12.12 per litre on diesel despite prices being raised by a cumulative Rs 4.75 this year.
Oil firms also raised rates of non-subsidised domestic cooking gas (LPG). The price in Kolkata per 14.2-kg cylinder will now be Rs 967.00.
Mr Moily, who had on Thursday met finance minister P Chidambaram on the issue, yesterday wrote to the Prime Minister, saying without a price increase the government will have to shell out Rs 97,500 crore to subsidise diesel and cooking fuel. With losses on diesel sales widening to Rs 12.12 per litre, plus losses on kerosene and LPG, the total revenue loss this fiscal comes to Rs 180,000 crore, Mr Moily said.
He argued that a one rupee increase in diesel price will cut loss by Rs 4,522 crore during the current fiscal while a Rs 3 per litre increase would trim losses by Rs 13,565 crore. A Rs 5 per litre hike would cut losses by Rs 29,390 crore. A Rs 50 per cylinder increase in LPG would trim cooking gas losses by Rs 2,604 crore. A Rs 2 per litre hike for kerosene would cut losses by Rs 1,014 crore.

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