By IANS,
Mumbai : A depreciating rupee and higher cost of crude was affecting the functioning of oil marketing companies (OMCs) and they could end up incurring losses of over Rs.121,000 crore during 2011-12, Petroleum Minister Jaipal Reddy said here Monday.
“Weakening by every Re.1 impacts the cost of diesel, kerosene and domestic liquefied petroleum gas by Rs.8,000 crore per annum,” Reddy said here while addressing a meeting of the consultative committee of member of parliaments attached to his ministry.
The rupee which traded at 46 a US dollar in the beginning of September, is now hovering around 49 to the dollar. The average price of the Indian basket of crude oil has also shot up to $111 a barrel.
“OMCs are forced to borrow even for their working capital requirements. If their financial health deteriorates on account of under recoveries, their ability to discharge assigned task of supplying the entire country with petroleum products would suffer,” said the minister.
“Even after these measures, the OMCs are currently suffering under-recoveries to the tune of Rs.271 crore per day. They are expected to incur an under-recovery of over Rs.121,000 crore.”
The government had in September hiked petrol prices by Rs.3.14 a litre citing huge under-recoveries and rising international prices of crude.