 "OMCs jittery; crude oil prices up")
This month has a double blow for oil marketing companies (OMCs), with the rupee at an all-time low versus the dollar, even as international prices head towards a 10-month high.
Every rupee's fall in the exchange rate against the dollar would cost them another Rs 9,000 crore annually in the form of under-recovery. And, every $1 increase in the price of a barrel of crude oil would add another Rs 5,000 crore annually to the subsidy burden. The under- recovery on diesel saw a 66 per cent rise from Rs 3.8 a litre on May 1 to Rs 6.31 a litre for the quarter ended June 16. At the current exchange rate, the under-recovery is likely to increase by at least another Rs 40,000 crore, taking the figure to a little above Rs 110,000 crore than the Rs 80,000 crore expected at the beginning of the year, when the exchange rate was around Rs 54 to a dollar. In addition, if crude oil prices shoot up, the figure could touch Rs 1,50,000 crore. "In the first three months of the financial year, the rupee has hit Rs 60 compared to Rs 54.29 versus the dollar in March-end.
This means a 10.5 per cent fall in the rupee value in the past three months," P K Goyal, director, finance, Indian Oil Corporation, told Business Standard.
The under-recovery on diesel had gone down to Rs 3.73 a litre in May, while that on kerosene and liquefied petroleum gas was Rs 27.93 a litre and Rs 378.38 a cylinder, respectively. However, as of June 16, the under-recovery on diesel had touched Rs 6.31 a litre and kerosene to Rs 27.75; LPG dropped to Rs 335.14 a cylinder. The average crude oil prices for April and May were $101.58 and $101.14 a barrel, respectively, while the average figure for 2012-13 was $107.97. Experts believe Brent crude is likely to touch $110 a barrel soon. The latest price of the Indian basket of crude oil is $104.01 a barrel.
Every rupee's fall in the exchange rate against the dollar would cost them another Rs 9,000 crore annually in the form of under-recovery. And, every $1 increase in the price of a barrel of crude oil would add another Rs 5,000 crore annually to the subsidy burden. The under- recovery on diesel saw a 66 per cent rise from Rs 3.8 a litre on May 1 to Rs 6.31 a litre for the quarter ended June 16. At the current exchange rate, the under-recovery is likely to increase by at least another Rs 40,000 crore, taking the figure to a little above Rs 110,000 crore than the Rs 80,000 crore expected at the beginning of the year, when the exchange rate was around Rs 54 to a dollar. In addition, if crude oil prices shoot up, the figure could touch Rs 1,50,000 crore. "In the first three months of the financial year, the rupee has hit Rs 60 compared to Rs 54.29 versus the dollar in March-end.
This means a 10.5 per cent fall in the rupee value in the past three months," P K Goyal, director, finance, Indian Oil Corporation, told Business Standard.
The under-recovery on diesel had gone down to Rs 3.73 a litre in May, while that on kerosene and liquefied petroleum gas was Rs 27.93 a litre and Rs 378.38 a cylinder, respectively. However, as of June 16, the under-recovery on diesel had touched Rs 6.31 a litre and kerosene to Rs 27.75; LPG dropped to Rs 335.14 a cylinder. The average crude oil prices for April and May were $101.58 and $101.14 a barrel, respectively, while the average figure for 2012-13 was $107.97. Experts believe Brent crude is likely to touch $110 a barrel soon. The latest price of the Indian basket of crude oil is $104.01 a barrel.