Oil companies hold 35 paisa cut in diesel, 55 paise hike in petrol

New Delhi Diesel prices for the first time in over 5 years should have been cut by 35 paisa on falling global rates but oil companies have decided to hold on to the rates pending a government decision on deregulationUnderrecovery or the difference between retail price and its imported cost on diesel was 8 paisa per litre in the first half of September The underrecovery in the second half has turned into overrecovery or profit of 35 paisa per litreRepresentational PictureNaturally when there is an overrecovery or profit rates should have been cut but oil companies are holding the price line as they await a clear decision from the government on diesel price deregulation an official saidThis would have been first reduction in diesel rates in over five years Diesel rates were last cut on January 29 2009 when they were reduced by Rs 2 a litre to Rs 3086Since then rates have only increased as international oil prices climbed Since January 2013 diesel prices have been raised by up to 50 paisa a litre every month to eliminateunderrecoveries The official said Oil Minister Dharmendra Pradhan is in Vietnam on an official tour and a deregulation or freeing of the fuel pricing from government control will be discussed upon his returnDeregulation would give oil companies powers to change rates in tandem with cost like they do in case of petrol since June 2010Like diesel stateowned oil companies have also not changed petrol rates which warranted a 54 paisa increase as its benchmark gasoline rates had firmed up in international marketThere are elections in Maharasthra and Haryana and an increase now would not have been a very popular decision the official said This is perhaps the first time that retail prices in India are higher than global ratesA government statement on fortnightly underrecoveries stated that diesel under recovery has been wiped out and there is overrecovery of Rs 035 per litre with effect from September 16Oil companies calculate the desired retail selling price of petrol and diesel on 1st and 16th of every month based on average international benchmark price and rupeedollarexchange rate Average benchmark gasoline rates have increased from USD 10925 per barrel in second half of August to USD 11104 in September Exchange rate has averaged Rs 6054 to a US dollar in September as compared to Rs 6073 to a dollar in second half of AugustThe combined effect of this should have resulted in an increase of 54 paisa a litre in price of petrol but state owned oil companies are holding on to the rates the officialsaid The next revision in diesel and petrol prices is due at the month endOnce the Cabinet approves deregulation or freeing of diesel prices oil companies can change rates in tandem with cost like they have been doing in case of petrol since June 2012 The NDA government has continued with the previous UPA regimes policy of raising diesel rates by up to 50 paise a litre every month to bridge the gap between cost and retail pricesOriginally petrol and diesel prices were deregulated in April 2002 when NDA government was in power Administered pricing regime however made a backdoor entry towards the end of NDA regime in the first quarter of 2004 when crude prices started inching up Congressled UPA controlled rates as international oil prices went through the roof In June 2010 however it freed petrol price from its control and rates have since them moved more or less in tandem with costIn January 2013 the UPA decided to deregulate diesel prices in stages through monthly 50 paise a litre increases Rates were last raised on August 31 after which losses have dippedRates have cumulatively risen by Rs 1181 per litre in 19 instalments since January 2013