Moily hopes rupee will stabilise soon
Mumbai: With rupee depreciation increasing losses on fuel sales, Oil Minister M Veerappa Moily on Friday hoped that the currency will stabilise soon helping the oil firms avoid any further rise in petrol and diesel price.
"Every time rupee depreciates by one against the US dollar, oil company losses (on fuel sales) go up by Rs 9,000 crore. We hope rupee stabilises so (that) there is no occasion of further petroleum price hike," he said here.
State-owned oil firms have hiked petrol price by Rs 6.12 per litre since June as rupee plummeted against US dollar making imports of raw material (crude oil) costlier.
In parallel, the oil companies have been since January raising diesel prices by 40-50 paisa per litre every month in hope that losses would be wiped out by second quarter of 2013-14 fiscal. But with rupee depreciation, losses on diesel sales have again climbed to Rs 9.45 a litre.
"We have authorised oil marketing companies to increase diesel prices between 45 and 50 paisa (per litre every month). Under-recovery (revenue loss) is a concern but we hope it will stabilise," he said.
The fall in rupee has meant that the Rs 80,000 crore loss on sale of diesel, cooking gas (LPG) and kerosene estimated at the beginning of the fiscal has now widened to Rs 123,192 crore, upsetting government's subsidy calculations.
Finance Ministry, which was hoping to give out only Rs 20,000 crore by way of fuel subsidy for this fiscal (with rest Rs 60,000 crore coming from upstream firms like ONGC), suddenly faces the prospect of shelling out more.
Finance Ministry had budgeted Rs 65,000 crore for fuel subsidy in the 2013-14 budget. But of this, Rs 45,000 crore have already been paid to meet the unmet subsidy of last fiscal and so only Rs 20,000 crore remained. This the Ministry hoped would be sufficient had crude oil prices and the rupee remained at same levels.
Moily has already written to Finance Minister P Chidambaram seeking Rs 63,000 crore as cash subsidy to state-owned fuel retailers to make up for half of their losses incurred on selling diesel and cooking fuel at government controlled rates.
Of the Rs 123,192 crore under-recovery or revenue loss estimate for current fiscal, Rs 59,918 crore would be on account of diesel, Rs 27,055 crore on kerosene and Rs 36,129 crore for LPG.
Rupee has depreciated by about 12 percent this fiscal.