In 2007-08, the bill rose nearly 40 per cent from $54.99 billion in 2006-07 as crude oil imports, including those by private sector refiners such as Reliance Industries and Essar Oil, rose 9.1 per cent to 121.67 million tonnes (mt). In 2008-09, imports are likely to be over 134 mt.
Along with rising demand, the depreciation of the rupee is also likely to inflate the import bill. Since May 1, the Indian currency has depreciated by nearly 6 per cent. A falling rupee increases the cost of imports. The country imports around 78 per cent of its crude oil requirements. This is set to go up to 85 per cent in the next three years considering the nearly 10 per cent increase in demand for crude oil every year and almost stagnant supply from domestic oil fields.
An official with Indian Oil Corporation (IOC), the largest retailer of petroleum products, said every Re 1 depreciation of the Indian currency against the dollar raises the company's crude oil import bill by Rs 3,000 crore.
Every 1 per cent depreciation in the value of the rupee increases the under-recoveries of oil marketing companies by 80 paise per litre, says a top official with Bharat Petroleum Corporation (BPCL), the country's second-largest crude oil refiner. This translates into around Rs 20,000 crore higher under-recoveries annually, the official adds.
At current crude oil price of around $120 per barrel, three public sector oil marketing companies