Shares of six state-run oil firms rose by 0.36% to 4.34% at 14:40 IST on BSE after Foreign Minister Salman Khurshid told the media that the government could announce steps to curb fuel consumption on 16 September 2013.
Among public sector oil marketing companies (PSU OMCs), BPCL (up 2.4%), HPCL (up 2.13%) and Indian Oil Corporation (up 0.36%), edged higher.
Among upstream companies, ONGC (up 4.34%), Oil India (up 2.02%) and GAIL (India) (up 0.66%), edged higher.
The BSE Sensex was up 215.84 points, or 1.14% at 19,195.60.
Foreign Minister Salman Khurshid said in an interview to business channel that the oil minister will on 16 September 2013 announce plans for lowering fuel consumption.
Reports suggested that government could announce a steep hike in diesel prices later this month as it looks at measures to cut oil costs by nearly $20 billion after the rupee's slide has left India facing an oil bill potentially 50% higher than on 1 May 2013.
"No matter what happens, we will have to cut down on fuel consumption," Khurshid told a news channel. "You can't keep subsiding costs of fuel and not restrict the use of the fuel," he added.
PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
A weak rupee also increases costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
Three state-run upstream oil firms -- Oil India, ONGC and GAIL (India) -- share part of the under-recoveries of PSU OMCs arising from the government-imposed price caps on three key fuels -- diesel, LPG for domestic use and kerosene sold through the public distribution system.
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