Profit on diesel sales have swelled to Rs 1.90 per litre as the Petroleum Ministry awaits return of Prime Minister Narendra Modi to cut rates.
With international oil prices continuing to slide, the over-recovery or profit on diesel sales, which was 35 paise in the second half of September, climbed to Rs 1.90 a litre, an official statement said.
Over-recovery or profit should have in natural course translated into a price reduction to bring retail selling price at par with cost. But the oil ministry decided to wait and watch last month.
Now, with the profit rising further, it wants to reduce rates and pass on the benefit to consumers but is unsure of its mandate.
Sources said the ministry is of the opinion that it does not have a clear mandate to reduce rates post the January 2013 decision of the Cabinet to hike prices by 40-50 paise a litre every month.
Diesel prices have not been deregulated or freed yet and so rates cannot be reduced.
Petrol on the other hand, had been deregulated in June 2010 and rates have since then moved every fortnight in tandem with the cost. Petrol rates were yesterday cut by 54 paise in line with international trend.
Sources said Oil Minister Dharmendra Pradhan has already written to Modi on the emerging scenario.