| The rising rupee over the last three months has brought cheer to the oil marketing companies, who have together added around Rs 250-300 crore to their operating profits already.
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| Also, the over 8 per cent rise in the rupee against the dollar is likely to discourage the government from raising petrol and diesel prices.
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| “The rise in the rupee is giving the marketing companies some leeway. A hike in prices of petrol and diesel at this moment is uncalled for. We can now afford not to burden the consumer and also keep the companies happy,” said an official in the petroleum ministry. A recent study by Crisil Research said that if the rupee continued at 41 to the dollar for the rest of the calendar year, the oil marketing companies will together add Rs 6,500 crore to their operating profits.
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| The oil marketing companies are also betting on the rupee remaining at the level of 41 to the dollar over the next six months.
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| The government had earlier planned to hike the prices of sensitive commodities – petrol and diesel – by Rs 2 and Re 1 a litre after the Uttar Pradesh elections to curb the mounting losses of oil marketing companies on retail sales.
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| The price of the basket of crude oil that Indian refiners buy has remained high — at over $65 a barrel in the financial year so far. This has led to the government-owned oil marketing companies, Indian Oil Corporation (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL), losing around Rs 145 crore a day.
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| When prices of petrol and diesel were last cut by Rs 2 a litre and Re 1 a litre on February 16, the price of the Indian basket of crude oil was at $67 a barrel, while the rupee was at 44.10 to the dollar. The rupee has since dropped to below 41 against a dollar.’
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| The government official said at the current level, oil bonds issued by the government would take care of the losses incurred by the marketing companies.
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| “The rupee continues to be strong, which is helping the oil firms add to their operating profits. But they continue to lose huge amounts of money,” said an oil analyst.
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| Iran LNG deal on backburner?
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| Iran may put the $220-billion deal to sell liquefied natural gas (LNG) to India on the backburner as New Delhi has refused to re-open the contract, sealed two years ago, according to an assessment by the petroleum ministry.
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| In a report to the Prime Minister’s Office on his meeting with Iranian President Mahmoud Ahmadinejad last month, Petroleum Minister Murli Deora said Tehran had given an assurance it was committed to the Iran-Pakistan-India (IPI) pipeline project and the LNG contract on equal terms.
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| The ministry’s assessment is that Iran will prioritise the IPI project and continue to push for a re-negotiation of the LNG deal price or put it on the backburner, Deora has said in the report.
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| Sources said Deora told Ahmadinejad that Iran should supply 5 mt of LNG a year at the price agreed upon in 2005, of $3.215 per mBtu. |
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