The Hindu Business Line : Oil cos: Rupee gain softens impact of crude prices

New Delhi May 22 The rupee's appreciation against the dollar has to some extent offset the impact of volatility in the crude prices on oil marketing companies.

"The dent would have been larger had not the rupee appreciated," a senior oil company official said.

The companies are losing Rs 6.10 per litre on petrol and Rs 3.75 per litre on diesel because the product is sold below cost price.

The under-realisation on sale of kerosene is Rs 14.75 per litre and Rs 170 per cylinder of LPG.

IOC has said that at the current level it is losing Rs 80 crore a day. On a comparative basis, in first fortnight of May last year (as on May 16), the companies were losing Rs 6.51 per litre on petrol and Rs 6.66 per litre on diesel.

As on May 1, 2006 the under-recovery on a cylinder of LPG was Rs 115 and Rs 16.13 per litre on kerosene.

Last year, when the India crude basket was at $67, the rupee was around 45 to a dollar. The rupee's current level against the dollar is around 41.

The rupee has appreciated by around eight percentage points since January 2007. India's crude basket on Monday rose to $67.59 a barrel from $67.4 on Friday. It comprises Oman-Dubai sour grade crude and Brent dated sweet crude in 58:42 ratio.

Brent crude on Monday closed at $69.83 a barrel, up 58 cents from the previous close.

However, Dubai benchmark settled eight cents lower at $65.91, while Oman dropped five cents to close at $66.26.

The Indian basket average for the current month so far stands at $64.89 compared to $65.52 in April and $60.26 in March.

In the fiscal ended March, the basket price averaged $62.46, compared to $55.72 the previous year.

The rupee appreciation has had a beneficial impact on oil marketing companies as their procurement prices are benchmarked to international product prices, denominated in dollars.

Oil company sources agreed that the rupee appreciation has offset the impact of increase in crude prices, when compared with the same period last year.

But they were quick to add that the Government must put in place a burden-sharing mechanism before the situation gets out of hand as a result of spiralling crude prices.

Besides, for 2006-07 the OMCs did not get any discounts from the standalone refiners on purchase of LPG and kerosene.

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