Media reports indicate that state-run oil marketing companies (OMCs) are incurring an under-recovery of
Rs 8.60 for per litre sale of diesel because of the sharp depreciation in rupee. This may be compared to the under-recovery of just Rs 2.62 in March.
Owing to the decline in the rupee value against dollar, losses on diesel rose to 8.60 per litre and after adding local sales tax or VAT, the desired increase in retail prices comes to Rs 9.67 in Delhi.
The under-recovery declined to Rs 2.62 in March from Rs 8.64 per litre earlier because of regular hikes in the price of the fuel.
In order to control fuel subsidy burden, the government decided to raise diesel prices in small dozes of 40-50 paisa a litre every month in January till such time that losses on the fuel are wiped out.
Indian Oil, Bharat Petroleum and Hindustan Petroleum at the beginning of the fiscal had projected Rs 80,000 crore revenue loss on selling diesel, cooking gas (LPG) and kerosene at government controlled rates during 2013-14.
Of this, the Finance Ministry had committed to meet Rs 20,000 crore and the rest Rs 60,000 crore was to be borne by the upstream firms like ONGC.
According to industry sources, the under-recovery figure for 2013-14 may rise to Rs 111,476 crore because of the depreciation of rupee.
Giving alternative projection for under-recovery, some analysts said if crude price stays above $105 per barrel and if rupee trades around Rs 60 to a US dollar, the under recovery may be Rs 158,102 crore.
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