OMCs can hike diesel price till under-recovery hits Rs 6/l

Jan 19 2013, 01:25 IST
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SummaryDespite Thursday’s terse government directive, public sector oil marketing companies are unlikely to be allowed to nullify their under-recoveries on the sale of diesel, the fuel that accounts for about 60% of the gross oil subsidy bill.

on a full-year basis, if this is implemented on a consistent basis. However, there is lack of clarity on the quantum and timelines of revision of diesel prices given the politically sensitive nature of the issue,” Icra wrote in a report.

It is likely that the government would let upstream oil companies ONGC, Oil India and GAIL cut their share of the subsidy burden corresponding to, if not more than, the overall decrease in the oil subsidy burden. The hike in the number of subsidised LPG cylinders from six to nine per household per year would, however, increase the under-recoveries by Rs 9,300 crore annually.

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