Diesel deregulation looks imminent after the difference between retail sale price and its actual cost dropped to a record low of 8 paisa

Mumbai : As diesel loss touched an all-time low of just 8 paise a litre as of Monday, due to staggered deregulation which began in September 2012, analysts have called for giving oil marketers a free hand to decide diesel prices, since this would be credit-positive for oil marketing companies (OMCs), reports PTI.

This compares with the losses on selling diesel below cost at Rs.1.78 per litre during the second fortnight of August 2014.

 “Now is the right time for the government to decontrol diesel price and allow oil marketing companies to price diesel according to global rates. This will help the government achieve its fiscal consolidation targets,” India Ratings said in a note.

On September 14, 2012 the UPA government had hiked the diesel price by Rs 5 per litre and thereafter OMCs were allowed to increase it by around 50 paise every month.                 Domestic rating agency ICRA said that diesel prices reaching market prices is credit positive for the petroleum sector.

According to ICRA, if lower crude prices remain for the rest of FY15, under-recoveries would fall to around Rs 90,000 crore and those on diesel would fall to almost one-fourth, to Rs 15,000 crore this fiscal, from

Rs 62,800 crore in FY14.

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