Kotak sees oil under-recoveries rising to Rs 1.3 tln in FY14

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PTI: Mumbai, Jan 08 2013, 21:45 IST

Brokerage firm Kotak Institutional Equities today revised its estimates of under-recoveries on diesel, kerosene and LPG to Rs 1.3 trillion for FY14 against Rs 1 trillion amid firmness in international oil prices, weaker exchange rate and the government failing to increase diesel prices.

However, the under-recoveries could decline to Rs 0.8 trillion if diesel prices are increased at Rs 1 per litre every month as being proposed, it said.

"We have increased our estimate of gross under-recoveries on diesel, kerosene and LPG to Rs 1.3 trillion for FY14 versus our previous estimate of Rs 1 trillion, assuming higher crude oil prices, weaker exchange rates and no further increase in retail prices of regulated fuels," senior executive director of the firm Sanjeev Prasad said in a note.

The firm has assumed an increase of USD 5 per barrel to USD 105 and exchange rate at Rs 54 against the US dollar to arrive at the estimated increase in under-recoveries for FY14, it said.

"However, if we were to assume a monthly increase of Re 1 per litre in retail price of diesel for FY14 along with roll-back of cap on LPG cylinders to nine, the under-recoveries will decline meaningfully to Rs 0.8 trillion," he said.

The Petroleum Ministry is considering a gradual increase in diesel prices of less than Re 1 per litre on a monthly basis over the next 15 months in a bid to eventually deregulate retail prices, based on the recommendations of Kelkar committee.

Progressive increase in diesel prices, if implemented, may lead to

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Reader's Comments (1)| Post a Comment

COMBATING FISCAL DEFICIT BY REINING FISCAL DEFICIT=BRAVO PM AND FM

Nitin N Varia | 09-Jan-2013Reply | Forward

=BRAVO FOR THE BOLDNESS IN TAKING A STAND TO RAISE DIESEL PRICES= ALL INDIA TO CONGRATULATE THE PM AND THE FM FOR THE BOLD AND COURAGEOUS ACTION THEY ARE ON THE ANVIL OF TAKING A DECISION FOR PARTIAL DE CONTROL OF DIESEL. THE MOST CONTROVERSIAL OF ALL DECISIONS AND BY TAKING THIS DECISION THE GOVERNMENT HAVE TO FACE COLLAPSE OF THE GOVERNMENT AS MAJORITY OF THE POLITICAL PARTIES WILL OPPOSE JUST FOR THE SAKE OF OPPOSITING TO APPEASE COMMON MEN AND WHO ARE NOT VERY FAMILIAR THE LONG TERM IMPLICATIONS OF INCREASING FISCAL DEFICIT AND IMMINENT DANGER OF RATING DOWN GRADE THAT CAN DEPRICIATE RUPEE TO 63 WHICH WILL CAUSE EVEN FURTHER MISERY. THE PM ANDFMARE REALLY VERY BOLD IN TAKING THIS DECISION. NO DOUBT IT IS VERY LATE BUT BETTER LATE THAN NEVER LATE AND NOT TO BE AFRAID THE KEY TO DO GOOD FORTHE COUNTRY. Unfortunately the Government is facing invasion of rape on many front and to combat that it requires strong will and determination lest the war is lost for congress and curtailing fuel subsidy is one such action. Out of compulsion of Fitch rating agency the pressure to raise diesel by Rs. 2 per litre will be taken in next 24 hours.