Amid concerns over rising crude oil prices, the petroleum minister met finance minister to discuss ways to conserve diesel. The government is also looking at increasing oil imports from Iran to save over USD 10 billion dollars, reports CNBC-TV18’s Aakansha Sethi.
The meeting essentially was to discuss the impact of rupee depreciation on the import bill as well as potential fallouts of the Syria situation if the US and UK intervene.
The oil ministry has been asked to come up with proposals to conserve oil and various scenarios incase there is an intervention in Syria.
There were three key measures that were discussed in the meeting. First was a hike in diesel prices which is likely after the Parliament session. Every one rupee hike in diesel prices gives the government about Rs 9,000 crore. Since the under recoveries are higher because of rupee depreciation, the government will get around Rs 30,000-40,000 crore if it hikes diesel prices by about Rs 3-4.
Second, the government is also considering hiking oil imports from Iran. However, these have to be paid in rupee and not dollar terms and so, that too will be beneficial. Moreover, the entire US sanctions have not been exhausted as yet and there is space for the government to import more from Iran. This will save the government about USD 10-12 billion on the import front.
Third, they are also looking at conservation measures. The oil ministry will start a campaign asking people to lessen their use of petroleum and diesel products.
Apart from these, the oil ministry is likely to come up with a few other proposals. However, it remains to be seen which ones are finally taken. In fact ban on export of diesel was also discussed today and this primarily happens from special economic zones (SEZs) and hence this measure was overruled.
Veerappa Moily, the petroleum minister after his meeting with the finance minister said, “ We are all worried about rupee depreciation. All of us should do our best to ensure that the tension on the economy is reduced. We are discussing about it. How we can conserve our energy consumption, fuel consumption.”