The Reserve Bank of India (RBI) has asked public sector oil marketing companies, IOC, HPCL and BPCL, to buy 50 per cent of their dollar requirement from any one public sector bank.
This move will help check the perception of excess dollar demand in the country amid a sharp decline in rupee value. The rupee hit a record low of 57 against the dollar on Friday.
Only for PSU refiners
The Oil Secretary, Mr G. C. Chaturvedi, told newspersons that the Ministry had received a communication from the RBI asking oil companies (IOC, BPCL and HPCL) to buy 50 per cent of their dollar demand from one state-run bank. Meanwhile, Mr Chaturvedi is understood to have suggested to the RBI that more than one bank should be allowed to issue dollars to the oil companies to prevent any operational hassles. India’s crude import bill in 2011-12 stood at $139.09 billion. Nearly 60 per cent of this is accounted for by IOC, BPCL and HPCL. The three public sector refiners buy crude oil worth $6-7 billion every month. The RBI directive is applicable only for public sector refiner, not for private refiners such as Reliance Industries Ltd and Essar Oil.
“Oil companies seek dollar quotes from multiple banks, giving an exaggerated impression of their demand for dollar. This leads to the strengthening of US dollar against the rupee,” Mr Chaturvedi said.
At present, the oil marketing companies ask for quotes from several banks to buy dollars.
The HPCL Chairman and Managing Director, Mr S. Roy Chowdhury, said the companies can buy the remaining 50 per cent of their dollar demand through competitive bids from the open market.
The Oil Minister, Mr S. Jaipal Reddy, said the Government was watching the global situation with “keen-interest” to see if fuel prices need to be revised or not.
“We are relieved at the fact that crude prices have eased. But the relief has been upset by rupee depreciation,” he added.
FUEL PRICING
However, no immediate change in the price of regulated products — domestic cooking gas, diesel and kerosene — is likely.
The Finance Minister, Mr Pranab Mukherjee, who heads the Empowered group of Ministers that decides the price of these products, is likely to resign next week to contest for the President’s post. A new EGoM would be constituted thereafter.