cut losses by R1,014 crore. The three price increases together would bring down government’s subsidy outgo to R50,928 crore, he argued.
Every one rupee depreciation of the Indian rupee against US dollar increases the loss of the public sector OMCs on sale of diesel, PDS kerosene and domestic LPG by about R7,900 crore per annum, he said.
During 2012-13, oil firms lost R161,029 crore on selling diesel and cooking fuel at government controlled rates. To make up for this, the government gave R85,000 crore cash subsidy, while upstream firms like ONGC gave R60,000 crore. The balance was absorbed by fuel retailers.
The combined borrowing of the three retailers at the end of March 2013 was R138,522 crore and their interest burden rose to R10,254 crore.
Saturday’s hike is the sixth increase in rates since June and in all petrol prices have gone up by a massive R9.17 per litre, excluding VAT.
Indian Oil Corporation said since the last revision in rates effective August 1, the rupee-US dollar exchange rate has deteriorated sharply, from R59.49 to a US dollar to R63.88, necessitating this price increase.