Reddy rules out decontrol of diesel prices, for now

Petroleum and natural gas minister S Jaipal Reddy on Friday made it clear that the government had no immediate plans to work towards decontrolling the heavily subsidised diesel prices.

At the same time, he admitted that the government is interfering heavily to keep down the price of petrol, which was officially decontrolled in June 2010.

There is ''some kind of discontinuation'' of petrol deregulation of late, he told newspersons on the sidelines of the 7th Asia Gas Partnership Summit in New Delhi.

India's three state-owned oil marketing companies (OMCs) are currently losing Rs14.73 a litre on diesel and Rs7.72 a litre on petrol due to state controls on retail prices. The OMCs have consistently been demanding a hike in petrol, diesel, LPG (cooking gas) and kerosene prices.

"Oil companies have no doubt suggested some measures. But the petroleum ministry does not have independence on the decision. I will take up the issue with the empowered group of ministers [on petroleum pricing] at an appropriate time," Reddy said.

Oil companies have demanded that since they have not been able to raise petrol price in line with increase in cost, they be compensated by the government for the Rs4,500 crore loss they have incurred this year on selling fuel at government rates sale.

"From the perspective of our ministry, the OMCs should be compensated by the government for all three petroleum products (on which oil companies lose money)," he said.

The OMCs are projected to lose about Rs1,40,000 crore in revenue on selling petroleum products below cost.