Despite various media reports, Aloke Kumar Banerjee, Director (Finance) at ONGC says there has not been any official word from the government on diesel pricing yet. The sharp fall in the value of the rupee against the dollar and the recent strengthening global oil prices due to the Syrian and Egyptian crisis have shot up India's crude oil import bill.
CNBC-TV18 had reported earlier that the Oil ministry has proposed Rs 5-per-litre hike in diesel prices. The finance ministry is expected to give its go ahead, keeping in mind the need to finance deficits. The industry’s under-recovery currently stands at Rs 1,40,000 crore against Rs 80,000 crore pegged for the full year.
Currently, the under-recoveries are linked with USD 56 per barrel, says Banerjee. “For every Re 1 fall against the dollar, the country’s subsidy burden increases by about Rs 8000-9000 crore,” he told CNBC-TV18.
For ONGC, he says, if there is a decrease in value by Re 1 vis-à-vis the dollar, then the PSU stands to gain about Rs 750-800 crore per annum. But if the price increases by one dollar the increase is Rs 900 crore. “With this increase in crude price as well as the decline in rupee price, there is an upside for ONGC as a company. But in rupee terms my subsidy is likely to increase,” he told CNBC-TV18.
Meanwhile, The RBI has set up a swap window for oil companies to ease the pressure on the beaten down rupee and reduce volatility in the forex markets.