With the rupee continuing to remain weak against the US dollar, losses on diesel have climbed to Rs 9.45 per litre, upsetting the government’s subsidy maths.
“We are now losing Rs 9.45 per litre on diesel as against Rs 8.60 (in the previous fortnight),” said P.K. Goyal, director (finance), Indian Oil Corp (IOC).
The government in January decided to raise diesel prices in small doses of 40-50 paise a litre every month till such time that losses on the fuel are wiped out. Regular hikes in fact brought down the losses on diesel to just Rs 2.62 in March from Rs 8.64 per litre.
But with the rupee dropping below 60 to a US dollar, losses on diesel have now climbed back to Rs 9.45.
The next revision in diesel price, as per the monthly rate hike authorisation from the government, is due at the month end.
Besides diesel, oil firms are also losing Rs 30.53 per litre on kerosene and Rs 368.58 per 14.2-kg LPG cylinder, Goyal said.
Indian Oil, Bharat Petroleum and Hindustan Petroleum at the beginning of the fiscal had projected Rs 80,000 crore revenue losses on selling diesel, cooking gas (LPG) and kerosene at government-controlled rates during 2013-14.
Of this, the finance ministry had committed to meet Rs 20,000 crore and the rest Rs 60,000 crore was to be borne by the upstream firms like ONGC.
But with rupee depreciation, the under-recoveries or revenue loss is now being projected at Rs 1,25,000 crore, Goyal said.
In 2012-13, oil firms lost Rs 1,61,029 crore in revenues at an average crude price of $107.07 per barrel and an exchange rate of Rs 54.45 to a US dollar.
Goyal said every one rupee depreciation against the US dollar increases annual revenue loss by a Rs 8,000 crore while an increase of $1 a barrel in international crude oil price leads to annual rise in under recoveries by Rs 4,300 crore.
The rupee has depreciated by 11.8 per cent since the beginning of the fiscal year in April and reached an all-time low of 61.21 against the US dollar on July 8. Some predict the rupee will touch 62 in a month.
The Indian currency on Monday declined 0.7 per cent to 60.027 per dollar, the biggest drop in almost two weeks.
IOC and other oil firms Monday hiked petrol price by Rs 1.55 per litre, excluding VAT, as the rupee averaged 60.03 to a US dollar in the first half of July as compared to 58.94 in the previous fortnight.
Oil firms have over the past six weeks raised petrol prices four times, a cumulative Rs 6.12.