At a time when crude oil price per barrel has crossed the $65 mark, the rupee’s appreciation against the dollar has somewhat lessened the impact of high crude oil prices on the margins of oil marketing companies (OMCs).

“Cost of purchase of crude has come down to the extent that the rupee has appreciated,” said Arun Balakrishnan, managing director, Hindustan Petroleum Corporation Ltd (HPCL). OMCs like Indian Oil Corporation (IOC), HPCL and Bharat Petroleum Corporation Ltd (BPCL) that import crude oil, refine it and sell finished products like petrol and diesel, have seen their losses on these commodities go down as compared to last year.

India’s largest refiner, IOC, for instance, had reported losses of Rs 100 crore per day last year. This year’s figure: Rs 85 crore per day. Breaking this up, oil companies were losing Rs 6.51 per litre on petrol, Rs 6.66 per litre on diesel, Rs 115 per cylinder on LPG and Rs 16.13 per litre on kerosene in May last year.

Compare this to 2007, and losses are down: Rs 6.13 per litre on petrol, Rs 3.76 per litre on diesel, Rs14.67 per litre on kerosene and Rs 167.14 per cylinder on LPG. Considering crude oil prices, they are marginally lower than last year. (The average of Indian crude basket in May was $67.22 per barrel whereas this year the average is $65.74 per barrel.)

Retail prices are also marginally higher this year. However, what has changed significantly is that the rupee has appreciated by almost 15 per cent — from Rs 46.43 per dollar last year, a dollar now costs Rs 40.45. Hence, per barrel, companies have to pay less in rupee terms. “The reduction of losses is on account of rupee appreciation,” said S V Narsimhan, director (finance), IOC.

... contd.