The National Democratic Alliance government's Diwali bonanza is on the anvil. The government is likely to announce a reduction in the diesel prices in the range of Rs2.5 to Rs3 a litre. The ministry of petroleum and natural gas is also finalising plans to take up the complete decontrol of the diesel prices.
A source told on condition of anonymity, "A cut in the diesel prices is imminent." Days after petroleum minister Dharmendra Pradhan hinted that the right decision will be taken on the right time, the ministry has rolled up its sleeves. Souces say a decision might be taken by Diwali.
On the decontrol of the diesel prices, the source said, "The ministry is in the process of making a cabinet note on the matter."
Given the over recoveries that the oil marketing companies are registering on the per litre prices of diesel, the government is indeed in a better position to reduce the rates now.
According to the ministry of petroleum and natural gas, the over-recovery on High Speed Diesel (HSD) applicable for the second fortnight of October effective 16.10.2014 is now Rs3.56 a litre. This essentially means that the oil marketing companies are earning that much extra and are no more registering losses on the sales, to be supported by the government in the form of subsidies. The Over-recovery was Rs 1.90 per litre during 1st fortnight of October 2014.
In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the second fortnight of October 2014 will be Rs 31.22 per litre (Rs 31.22 per litre in last fortnight) and Rs 404.64 per cylinder (Rs 404.64 per cylinder in last fortnight) respectively.
The overall losses of the oil marketing companies, meanwhile, have come down. Effective October 16, the companies are now incurring combined daily under-recovery of about Rs 139 crore on the sale of PDS kerosene and domestic LPG. This is lower than Rs156 crore daily under-recoveries during previous fortnight. "The under-recoveries for the first quarter of the financial year 2014-15 has been Rs28,691 crore. The figure was Rs1, 39,869 crore for full year in the 2013-14," according to the ministry.
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