BPCL shares were up 1 per cent at Rs. 421.50, while Indian Oil shares gained 0.85 per cent to Rs. 309.40 as of 12.03 p.m.
Upstream firms such as ONGC, which contribute to the subsidy burden, also gained. ONGC shares traded 0.35 per cent higher at Rs. 329.70.
This was the fourth hike in diesel prices since January when the government permitted state-run oil companies to hike the price of the fuel by 45-50 paise per litre per month till the losses incurred on the sale of the fuel below market rates are wiped out. Diesel prices were last increased in March, by 45 paise.
Oil firms were losing around Rs. 6 on the sale of every litre of diesel before the latest hike.
The price of petrol, on the other hand, is market driven and is revised every fortnight in line with international rates. Petrol prices were last revised on April 30, when they were slashed by Rs. 3 (minus taxes), the highest cut in over five years.
Along with diesel, the government sells cooking gas (LPG) and kerosene at subsidized rates, and compensates the oil firms for selling the fuels at lower prices.
For the last financial year ending March 31, 2013, the under-recovery (losses) on the three products is estimated at Rs. 1,60,000 crore.
After the revision, prices stand as follows: New Delhi - Rs. 49.69 per litre; Mumbai - Rs. 56.04; Chennai - Rs. 52.92; Kolkata - Rs. 53.97.
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