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Moily’s plan to save the Indian rupee: Shut petrol pumps at night

Petroleum ministry is planning to do away with 24-hour petrol pumps as part of austerity measures.

Written by D K Singh | New Delhi |
September 1, 2013 2:14:02 am

The petroleum ministry is planning to do away with 24-hour petrol pumps in cities as part of its “austerity measures” in view of the falling rupee and rising international crude oil prices. By regulating the timing for sale of petroleum products,the ministry hopes to contain fuel demand and check the outflow of foreign exchange on account of oil imports.

Related: Petrol price goes up by Rs 2.35 a litre,diesel by 50 paise

“It (petrol pump timings) could be 8 am-8 pm or something like that. We are still working on it. It may not be implemented on the highways though. We have to try out these things. We are going through difficult times. We need to discipline ourselves. People will have to tighten their belt and some austerity measures have to be taken without affecting economic activity. Such measures are already in place in many other countries,” said Petroleum & Natural Gas Minister M Veerappa Moily.

Related: Falling Indian rupee to impact oil companies,put pressure on deficit

The “austerity measures” are set to be announced shortly.

At present,the government has no role in deciding the timings of petrol pumps.

On September 16,the ministry is also planning to launch a six-week conservation campaign on saving fuel in major cities. The special drive,estimated to cost Rs 17.5 crore,would include mass media campaign,street plays,street intersection activities,drivers’ training programmes and hoardings at retail outlets. According to Moily,the estimated savings through this campaign could be around Rs 16,000 crore.

Following instructions from Prime Minister Manmohan Singh to save $25 billion in the current financial year from oil imports,Moily wrote to him on Friday suggesting some measures,including “demand containment” at previous year’s level as against the estimated 4.1 per cent growth, increasing imports from sanction-hit Iran,Rs 17.5 crore conservation campaign,and 5 per cent blending of ethanol. These measures could result in savings of around $19-20 billion,Moily said in his letter.

“During 2013-14,public sector and joint venture refineries are expected to import 105.96 MMT of crude oil. If 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”.

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