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The rupee’s sharp slide has taken a toll on the stocks of the public sector oil marketing companies. Over the past two days, the Indian Oil stock has lost 3.6 per cent, BPCL is down 4.6 per cent and HPCL has shed 7.2 per cent. Two key factors — crude oil price and the value of the rupee — impact the extent of under-recoveries (notional loss due to selling fuels below cost) suffered by the oil companies.
Crude oil price has been benign in recent times, with Brent crude hovering around $102 a barrel. But the sharp depreciation in the rupee has dampened the benefit, and once again raised the spectre of rising under-recoveries.
In FY13, under-recoveries were at an all-time high of around Rs 1,61,000 crore. It was hoped that in FY14, moderating crude oil prices, gradual increase in the price of diesel and a cap on the number of subsidised cooking gas cylinders will help reduce under-recoveries significantly. But the rupee’s weakness, if it persists, could put paid to these hopes.
The stocks of the public sector upstream companies ONGC and Oil India which share a portion of the under-recoveries have also fallen between 3-3.5 per cent over the past two days.
anand.k@thehindu.co.in
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