The continuous fall in the value of the rupee has worried the petroleum ministry that has sought immediate intervention from the Prime Minister’s Office (PMO).
In a recent letter to the PMO, the petroleum secretary has stated that higher cost of oil imports in the wake of sharp fall in the rupee against the dollar is making the state-owned oil marketing companies (OMCs) borrow more and more, resulting in a sharp deterioration of their debt-equity ratios.
In case of Hindustan Petroleum and Bharat Petroleum, these ratios have almost doubled due to the increased debt required to purchase oil for meeting the domestic demand.The weakening of the rupee against the dollar has made oil imports costlier. Non-revision of domestic fuel prices despite high crude oil (the raw material) prices is putting further pressure on the financials of the oil marketing companies.
“During March, the price of the Indian basket of crude oil ranged between $121.50 and $125.44 per barrel, and the average price was $123.61 per barrel as compared to $117.67 per barrel in February, 2012,” the letter said.
The price of the Indian basket of crude was highest at $125.40 per barrel on March 13 during the financial year 2011-12, the letter said. The borrowings of oil companies have touched R126,714 crore by the end of January 31.
{{/usCountry}}The price of the Indian basket of crude was highest at $125.40 per barrel on March 13 during the financial year 2011-12, the letter said. The borrowings of oil companies have touched R126,714 crore by the end of January 31.
{{/usCountry}}The petroleum ministry told the PMO that the combined interest burden of these borrowings on the three oil companies is likely to cross Rs 9,800 crore during the year ending March 31, 2012.
The under-recoveries of OMCs on sale of diesel, PDS kerosene and domestic LPG below the cost price have already touched R97,313 crore and the estimated under-recoveries of OMCs for the 2011-12 is expected to be Rs 139,659 crore.
This has adversely affected their credibility in the market.