FY14 under-recoveries seen at Rs 1.67 lakh-cr: OilMin srcs

The bad news just keeps piling on. CNBC-TV18 learns from sources that the Oil Ministry has pegged FY14 under-recoveries at Rs 1.67 lakh crore. Moreover, under-recoveries could also surge to Rs 1.80 lakh crore on account of the crisis in Syria.

The Oil Ministry is trying to come out with various proposals to tackle the situation. One of them being that petrol pumps will be shut in the evening. The original estimate at the start of the fiscal was of Rs 97,000 crore. It is hoping to cut that under-recovery bill down by nearly Rs 30,000 crore with a fuel price hike, a one-time diesel price hike.

Also Read: No plan of 12-hour curfew on sale of petrol, says Moily

CNBC-TV18 had reported earlier that the Oil Ministry is very keen on a Rs 5 per liter price hike, something that Oil Minister Veerappa Moily has even written to the Prime Minister and Finance Minister about on Friday saying that such a steep price hike would cut the under-recovery bill by Rs 30,000 crore. He has also given the impact of a smaller diesel price hike of Rs 3 per liter and Rs 1 per liter.

Increasing imports from Iran is another option, which could save the government about USD 8 billion. Crude is bought from Iran in rupee denominated terms, so that could be huge a saving. However, we have been seeing a problem with Iran on terms of payments. Sources in the Oil Ministry is saying Ministry of External Affairs, Home Ministry, Oil Ministry, Finance Ministry, all of them working very, very closely together to try and fast-track this and come up with a resolution. Oil Ministry also believes that increasing imports from Iran will not attract sanctions from USA since that country has not really banned crude imports.

So these are some of the things that the Oil Ministry is looking at. The G20 is of course beginning, so there perhaps would be a cabinet meet on that one-time diesel price hike maybe next week.