Weakening Rupee burdening Indian oil cos' finances: Oil minister

**New Delhi:**A weakening rupee against the USdollar is putting extra burden on state-owned oil companieswhich have been holding priceline despite rising losses, OilMinister S Jaipal Reddy said today.

Addressing the Meeting of the Consultative Committee ofMPs attached to his ministry in Mumbai today, Reddy said theexchange rate which was Rs 46 to a US dollar at the beginningof September 2011, is now hovering around Rs 49, according toan official press statement issued here.“Weakening by every Re 1 impacts the cost of diesel, PDS kerosene and domestic LPG by Rs 8,000 crore per annum,” hesaid.

[caption id=“attachment_104125” align=“alignleft” width=“380” caption=“The OMCs are currently losingRs 271 crore per day on fuel sales.Reuters”] [/caption]

Expressing concerns over the impact of weakening rupeeover the crude prices and their impact on the under-recoveries(revenue loss) of the oil marketing companies (OMCs), he saidthe Government was committed to protect the interests of thecommon man and efforts were being made to minimise the impactof rising crude prices.

The average price of the Indian basket of crude oil,which was $ 69.76 per barrel in 2009-10 has shot up to USD111 per barrel.“To minimise the burden of rise in international priceson consumers, the Government has eliminated the customs dutyon crude oil and reduced customs duty on petroleum products by

5%. Excise duty on diesel has also been reduced by Rs2.60 per litre,” he said.

Even after these measures, the OMCs are currently losingRs 271 crore per day on fuel sales. “They are expected toincur an under-recovery of over Rs 121,000 crores during theFY 2011-12.“The Minister said the under-recoveries have affected thefinancial health of OMCs, and diminishing cash flows havereduced resource generation for expansion and modernisation.

“OMCs are forced to borrow even for their working capitalrequirements,” said Reddy, “If their financial healthdeteriorates on account of under recoveries, their ability todischarge assigned task of supplying the entire country with

petroleum products would suffer.“The Minister said good financial health of OMCs is apre-requisite for ensuring long term energy security in the

country.

PTI