While terming the $20 billion foreign exchange savings plan for the oil sector by petroleum minister Veerappa Moily as “optimistic”, finance minister P Chidambaram does not seem to be fully convinced with Moily’s proposal to save 3% in the consumption of petroleum products (petrol, diesel and LPG).
Moily, in his letters to Prime Minister Manmohan Singh and Chidambaram, had projected a savings of $2.5 billion or Rs. 16,000 crore as the savings with this 3% cut in petroleum products consumption.
“It is felt that the projected savings of foreign exchange on account of various measures proposed in your letter are optimistic ...while it is recognised that a conservation campaign might result in some reduction in petro-product consumption, the estimates of savings projected at 3%, over and above the proposed crude imports cut, appear to be ambitious,” Chidambarm said in a recent letter to Moily.
Moily has also stated in his $20 billion forex savings plan that oil PSUs will raise $3.75 billion during 2013-14 through external commercial borrowings (ECBs).
To this, Chidambaram suggested that oil PSUs should rather increase this figure considering India’s huge oil import bill every year.
“It is noted that out of total crude oil import bill of over $160 billion per annum, only an amount of $3.75 billion is proposed to be financed ECBs ...possibilities of increasing the ECB mode of financing in this regard may please be explored,” the finance minister added.
State-owned oil company—Indian Oil has already informed that it will raise funds in two tranches of $1 billion each in the third and fourth quarter of the current financial year.HPCL and BPCL will raise $500 million of ECBs by October 2013 and the remaining in January to March quarter of 2013-14.