Losses on diesel, LPG sale mount due to weak rupee
New Delhi: With rupee falling to new lows, losses on diesel and cooking fuel have widened to their highest levels this year, upsetting the government's subsidy maths.
With the rupee dipping to 60 against US dollar, losses on diesel sales have widened to Rs 9.67 per litre, industry sources said.
The government in January decided to raise diesel prices in small dozes of 40-50 paisa a litre every month till such time that losses on the fuel are wiped out. Regular hikes in fact brought down the losses on diesel to just Rs 2.62 in March from Rs 8.64 per litre.
But with rupee dropping below 60 to a US dollar, losses on diesel have climbed back to 8.60 per litre, sources said adding after adding local sales tax or VAT, the desired increase in retail prices comes to Rs 9.67 in Delhi.
Indian Oil, Bharat Petroleum and Hindustan Petroleum at the beginning of the fiscal had projected Rs 80,000 crore revenue loss on selling diesel, cooking gas (LPG) and kerosene at government controlled rates during 2013-14.
Of this, the Finance Ministry had committed to meet Rs 20,000 crore and the rest Rs 60,000 crore was to be borne by the upstream firms like ONGC.
But with rupee depreciation, the under-recoveries or revenue loss is now being projected at Rs 111,476 crore, they said.
If crude price stays above USD 105 per barrel and considering an exchange rate of Rs 60 to a US dollar, the under recovery may be Rs 1,58,102 crore for the full year.
In 2012-13, oil firms lost Rs 1,61,029 crore in revenues at an average crude price of USD 107.07 per barrel and an exchange rate of Rs 54.45 to USD.
Besides diesel, oil firms are also losing Rs 30.68 per litre on kerosene and Rs 368.58 per 14.2-kg LPG cylinder.
These under-recoveries on kerosene and LPG have widened from Rs 27.75 per liter and Rs 335.14 per bottle respectively last month.
Sources said every one rupee depreciation against the US dollar increases annual revenue loss by a Rs 9,000 crore while an increase of USD 1 a barrel in international crude oil price leads to annual rise in under recoveries by Rs 4,300 crore.
Rupee has depreciated by 11.8 percent since the beginning of the fiscal year in April and reached an all-time low of 60.73 against the US dollar on June 26.