Is govt mulling a fuel austerity drive to rein in rising CAD?
The government may cut down on consumption of petroleum products such as diesel, cooking gas and kerosene and trim oil imports to arrest foreign exchange outflow. HT reports.business Updated: Sep 03, 2013 03:04 IST
The government may cut down on consumption of petroleum products such as diesel, cooking gas (LPG) and kerosene and trim oil imports to arrest foreign exchange outflow and rein in a rising current account deficit (CAD).
Petroleum minister Veerappa Moily may have retracted from his earlier statement to close petrol pumps at night but his letters to Prime Minister Manmohan Singh and finance minister P Chidambaram clearly talks of measures to reduce the consumption of sensitive petroleum products.
Moily’s August 30 letters to the PM and finance minister talks of an action plan to reduce $19-20 billion in foreign exchange in 2013-14. This includes a $7-billion savings plan to be achieved by cutting consumption of essential petroleum products and oil imports.
It has been proposed to cut down the annual oil imports by public sector oil companies by around 2.5 million tonnes this year and keep it at last year’s level of 104 million tonnes. The original plan of PSU refineries was to import 106 million tonnes of oil during the year.
“If PSUs and their joint venture refineries restrict their imports at the level of 2012-13 i.e 104 million tonnes, the reduction in forex outflow will be $1.76 billion,” Moily said in his letter.
The minister has also suggested a 3% reduction in the consumption of diesel, LPG and kerosene during the year, which is expected to save another $2 billion.
The measures will be undertaken to increase public awareness regarding the need to conserve petroleum products , a move that is likely to result in a savings of $2.5 billion or Rs. 16,000 crore, officials said.
A mega campaign on fuel savings in major cities at a cost of Rs. 17.5 crore starting September 2013 has also been proposed. The government also plans to reduce LPG imports during the year to save $258 million and blend ethanol with fuel to save another $340 million.