The joy of the two consecutive price cuts in petrol may be short-lived as the rupee hit a new record low on Tuesday.
As a falling rupee increases the cost of oil imported by the state refiners, industry sources said a petrol price hike is very much on the cards and may happen as early as Thursday.
State-owned oil marketing companies (OMCs) are busy calculating the exact impact of the rupee on the price of petrol.
“We are yet to calculate the exact impact of the falling rupee but it is likely that consumer prices of petrol may be hiked by between 50 paise and R1 a litre,” a senior OMC executive said.
Petrol being a de-controlled product, the OMCs review its price every fortnight.
Petroleum ministry officials said the weakening of rupee has added Rs 50,000 crore to the fuel subsidy.
“Every time the rupee depreciates by one rupee against the US dollar, Rs 8,000 crore is added to the fuel subsidy bill…as the rupee has depreciated from R46 to a dollar to R52, this has added Rs 50,000 crore (to the subsidy),” a senior petroleum ministry official said.
OMCs are projected to incur under-recoveries of over Rs 1,35,000 crore in the current fiscal on selling diesel, cooking gas and kerosene below their cost price.
“These under-recoveries put a huge stress on their (OMCs) finances, thereby affecting their borrowing capacity based on which these companies buy dollars make payments for purchases of crude oil,” the official said.