India may raise diesel prices for industries

By Nidhi Verma

NEW DELHI (Reuters) - The government may charge higher diesel prices for industrial users and allow Reliance Industries to sell gas oil from its export-focused refinery to local retailers struggling to meet soaring demand, senior officials said.

Diesel sales have risen sharply despite the government's move to raise fuel prices by about 10 percent in early June.

Use of diesel by industrial units, which find the subsidised fuel cheaper than freely priced fuel oil, and for emergency power supply in homes, malls and offices, has raised demand and forced refiners to increase imports.

Diesel sales rose 18 percent during April-July compared to a year ago, the chairman of India's biggest oil refiner and retailer, Indian Oil Corp, Sarthak Behuria said.

Sales to agriculture and transport sectors rose 10-12 percent while that to power and other sectors rose 30 percent, he said.

"We are exploring the possibilities of differential pricing for commercial consumers. A note has been put up with the ministry," Behuria said.

Hindustan Petroleum Corp Chairman Arun Balakrishnan said state refiners wanted to sell diesel at market prices to industrial clients. "Currently we are losing 15-16 rupees a litre on diesel, at least we will recover that."

Oil secretary R. S. Pandey said: "Market price that's what they have demanded so we have to look at it."