Gurgaon, Feb 14 (IANS) Petroleum Minister Jaipal Reddy Tuesday said his ministry may consider at an appropriate time to reduce the subsidy it incurs on selling cheaply diesel and liquefied petroleum gas (LPG) cylinders.
"Deregulation of diesel is very difficult. But at an appropriate time, the ministry (ministry of oil and natural gas) would reduce subsidy on diesel and liquefied petroleum gas (LPG)," Reddy told reporters here after an event.
Diesel is heavily subsidised by the government. The three state-owned oil marketing companies (OMCs) incurred under-recovery of Rs.12.95 on sale of each liter of diesel in the first fortnight of January, according to data provided by the ministry of petroleum and natural gas.
"We have already taken the issue of losses bearing oil companies with finance ministry. We want finance ministry to provide for losses incurred on petrol as well," the minister said.
OMCs suffered under-recoveries of around Rs.37,719 crore on sale of diesel in the first half of the current financial year, which is more than half of the total Rs.64,900 crore of under-recovery on all the petroleum products.
Reddy added, that the OMCs will need to raise diesel price by Rs 11.35 per litre if the government was to free its pricing like it was done in case of petrol in June 2010.
Even petrol rates have not moved in tandem with cost since its deregulation and state-owned oil firms have refrained from raising rates since December.
Amid in view of crucial assembly elections in five states including Uttar Pradesh and Punjab the oil prices were not increased.
Oil firms claim that they lose Rs 3.25 per litre on the petrol currently.
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