Consistent diesel price hikes has reduced under-recoveries for oil marketing companies. Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation have been hiking diesel price by around fifty paise each fortnight since Jan 2012 after the government allowed it to do so.
Oil firms have been directed to hike price in phases till the time loss on sale of diesel is wiped out completely. Before the government's decision to allow price hike, companies were facing loss of over Rs 10/litre on sale of the fuel. This may be called as partial de-control of the commodity to help ease burden of public sector marketing companies.
In an interview to CNBC-TV18, RK Singh, chairman and managing director, BPCL said that his company will hike diesel price by fifty paise next month (July 1)
Based on the exchange value of Rs 57 to a dollar as the exchange rate, under recovery on diesel stands at Rs 6.30, he added.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Before we talk about this petrol price hike, given the recent increase you have seen in crude prices, where do under recoveries stand at for diesel prices right now?
A: Based on 57/USD exchange rate, the under recovery on diesel stands at Rs 6.30. It has come down to Rs 4.50 but it has gone up to Rs 6.30 now.
Q: You are affecting these petrol price hikes along predicted lines, are you confident that next diesel price will also happen at the start of next month and will it just be 50 paise or because of the under recovery expansion - you would be looking at a more aggressive hike this time?
A: It will indeed happen, I have no doubt about it but the quantum as of now remains 50 paise because that is what the cabinet has decided. I don’t think there will be any change in that.
Although because depreciation in the rupee things have become worse but I don’t think there is any such decision as of now to raise it by more than 50 paise. One doesn’t know. We will certainly take a view and maybe we will work on this but as of now it is 50 paise and we will certainly do it on July 1.