Oil Minister rules out deregulation of diesel prices

Oil Minister S Jaipal Reddy on Monday ruled out deregulation of diesel prices and said he had demanded that the government compensate state-owned oil firms for the losses they made on not raising prices of petrol.

"Deregulation of diesel in entirety is very difficult proposition but at appropriate time we may look at reducing subsidy on diesel. But that time hasn't come," he told reporters here.

State-owned oil companies will need to raise diesel price by Rs11.35 per litre if the government was to free its pricing like it was done in case of petrol in June 2010.

Even petrol rates have not moved in tandem with cost since its deregulation and state-owned oil firms have refrained from raising rates since December in view of assembly elections in five crucial states like Uttar Pradesh. Oil firms lose Rs3-3.20 a litre on the fuel currently.

Reddy firmly said there was no proposal at the moment to raise diesel rates.

He, however, supported oil companies demand for being compensated for revenue losses incurred on selling petrol below imported cost.

"We have taken the issue up with finance ministry. We want finance ministry to provide for losses incurred on petrol as well," he said.

Currently the government makes good only the losses incurred on diesel, domestic LPG and kerosene.

On Monday, Indian Oil Corp (IOC) Chairman RS Butola had stated that his company had lost about Rs443 crore since the last revision in petrol price on December 1.