The petroleum ministry plans to raisediesel rates by Rs 4-5 per litre after the parliament session ends on September 7 as oil firms' revenue loss has soared to almost half the retail price, but it expects stiff resistance from the ruling coalition, having tough time defending the government on the coal issue.

Oil companies, which are free to pair pump prices ofpetrol with market rates, are also set to raise gasoline prices by about 5 a litre. "We could not raise its price last month due to the monsoon session. But we can't wait beyond," a senior executive in a state oil firm said. The parliament session will be over on September 7 unless it ends earlier because of current pandemonium due to alleged coal scam.

"It will be a disaster for the economy if government defers its plan to raise diesel prices. Coalgate is a political issue and diesel price is an economic issue. Companies are losing more than 19 a litre in Delhi. It is not sustainable even for the exchequer," said a senior executive in a state oil firm. Diesel is sold at 41.29 a litre in Delhi. Diesel accounts for more than 60% total revenue loss of oil firms, which is estimated about 190,000 crore for financial year ended March 2013.

A senior government official said "diesel price hike is inevitable but the timing and extent of price increase would be decided politically." It is expected that the government may also impose higher duty on diesel vehicles, which are becoming popular because the fuel is much cheaper compared to petrol, which costs 68.46 per litre in Delhi.

Diesel is also competing with auto gas due to narrowing price difference between the two fuels, oil ministry's data keeper Petroleum Planning and Analysis Cell (PPAC) said. Diesel is now an alternate for auto gas also because of high price of CNG conversion kit. CNG price in Delhi is 38.35/kg. The price gap was much higher about a year ago when CNG was sold at 29.30/kg and diesel at 37.75/litre.

Earlier, Minister of State for Petroleum & Natural Gas RPN Singh told the Parliament that "dieselisation" was a grave concern as affluent people were also getting low-cost fuel.

Automobiles including sports utility vehicles (SUVs), gensets and mobile towers enjoy more than 22% of diesel subsidy, Singh said.

Cars and SUVs share about 15.88% of total diesel consumption while about 4.6% diesel consumption is by genset and 1.93% is by mobile towers, he said.

Besides diesel, the oil ministry has also written to the ministry of finance for levying additional excise duty on gensets and mobile towers, he said. An oil ministry official said oil marketing companies reported steep jump in prices of regulated fuels due to rising international oil rates and the ministry would recommend raising their prices immediately after the parliament session. (Economic Times)