What is given in one hand seems to be taken away in another hand. Oil marketing companies are to hikethe price of diesel by 45 paise per litre (excluding taxes) with effect from Saturday, according to IndianOil. The hike comes barely a week after the oil companies had reduced the price of petrol by Rs. 2 perlitre. This is the third consecutive price hike for diesel in the last three months.

While petrol is a deregulated commodity, the government still controls the price of diesel, and allowsonly marginal revisions.

In January this year, the government had allowed the oil firms to raise the price of diesel by 40-50 paiseevery month until the companies have wiped out the losses they incur from having to sell diesel atsubsidised rates to the public. The oil firms are currently losing around Rs. 11 on the sale of every litre ofdiesel.

Unlike petrol, prices of diesel, cooking gas (LPG) and kerosene are not decontrolled, and the governmenthas the ultimate control on pricing. The government subsidises the three products and compensates theoil firms for selling the fuels at lower prices.

For the current financial year ending March 31, 2013,the under-recovery (losses) on the three productsis estimated at Rs. 1,60,000 crore.