Rupee rise limits oil firms’ losses, diesel price hike unlikely soon
Consumers are likely to be spared another hike in diesel prices, thanks to the rupee’s rise against the US dollar that has resulted in a sharp fall in oil companies’ losses from the fuel. Anupama Airy reports.business Updated: Oct 17, 2012 01:16 IST
Consumers are likely to be spared another hike in diesel prices, thanks to the rupee’s rise against the US dollar that has resulted in a sharp fall in oil companies’ losses from the fuel.
Diesel prices were expected to be hiked by Rs 4-5 a litre in the next six months of the current fiscal.
Last month, the government allowed state-owned oil firms to hike diesel prices by Rs 5 a litre.
With the rupee gaining against the US dollar along with the fall in global oil prices in the last fortnight (October 1 to 15), the under-recoveries of the three state-owned companies on diesel has fallen to Rs 9.82 a litre from the earlier R11.65, according to government data.
Under-recoveries are losses incurred by oil firms on selling diesel below the cost price.
“If losses stay at this level or fall further, consumers may be spared another rise in diesel prices this year,” said the government official. “However, the trend needs to be sustained.”
The rupee has fallen from Rs 53.7 against the US dollar during the period September 16- 30 against Rs 52.5 during October 1-15. In addition, the average global crude oil prices have fallen to $109.9 a barrel during October 1-15, from $110.6 a barrel in September 16-30.
As reported by HT earlier, the finance ministry in line with the Kelkar panels report on fiscal discipline, wants to slash the subsidy outgo on diesel to Rs 8-9 a litre.
“The appreciation of the rupee against the dollar has further reduced the losses on diesel and if this continues or remains at this level, the possible hike in diesel prices may get averted.”