Diesel, LPG prices may be hiked on June 9

NEW DELHI: The ministerial panel on fuels under FM Pranab Mukherjee is expected to raise diesel and cooking gas prices on June 9. Diesel price is likely to be increased by Rs 2-3 a litre and cooking gas by about Rs 35 per cylinder. The increase in price of diesel, which is the main transportation fuel, is expected to push up cost of essential items, all goods that move on trucks as well as bus and taxi fares.

A revision in diesel and cooking gas prices was in the offing since petrol price was jacked up on May 15 by Rs 5 a litre, the steepest-ever increase. The ministerial panel was expected to meet on May 11, the day after the last phase of polling was to get over in Bengal. But the government pushed the pause button in view of a see-saw in global crude prices after Osama bin-Laden's killing.

The fluctuation in crude price in the intervening period has brought down the loss on a litre of diesel from a high of Rs 19 or so, when the price of Indian crude mix averaged nearly $121 a barrel before Osama was killed. Diesel and cooking gas prices were last revised in June 2010. The present pump price of diesel corresponds to around $70 a barrel of crude mix bought by the state-run refiners. That mix is ruling at $118 now. As a result, oil marketers are currently losing Rs 16.49 on every litre of diesel and Rs 329 on each cooking gas refill.

The oil ministry will also push for an increase in the price of kerosene, politically the holy cow of fuels. The companies are losing almost Rs 30 a litre on the poor man's fuel, nearly 40% of which flows into the black market. The panel is unlikely to tinker with fuel taxes for fear of upsetting the government's calculations. Top finance ministry officials have, over the week, categorically ruled on reducing taxes to pare increase in fuel prices.