PSU/ JV refineries restrict their imports at the level of 2012-13 (103.66 MMT) and the price of crude oil in international market is considered at $105/ bbl, the reduction in forex outflow will be $1.76 billion,” Moily said in a note attached with his letter.
Suggesting an increase in oil imports from Iran — which came down drastically in the last financial year following sanctions by the US and the European Union — Moily said around 2 MMT crude oil has been imported from Iran so far in the current financial year. An additional import of 11 MMT during 2013-14 would result in reduction in forex outflow by $8.47 billion, he said.
Moily told The Sunday Express that US sanctions against Iran would not come in the way of additional import from there. Reduction in forex outflow on this account is based on the fact that India pays in rupees for oil imports from Iran.
In his note to the PM, Moily said it is estimated that every Re 1 depreciation of the Indian rupee against the US dollar increases the under-recovery of the public sector oil marketing companies on sale of diesel, kerosene and domestic LPG by about Rs 7,900 crore per annum. He said that if the average price of the Indian crude basket is taken at $110 a barrel and the average exchange rate at Rs 66 a dollar for the balance financial year, the under-recovery of OMCs will increase to Rs 1,68,000 crore. He said the under-recoveries could be met from “either budgetary support from the government or appropriate increase in the price of diesel, kerosene and domestic LPG”.