Union Minister for Petroleum & Natural Gas Mr. Jaipal Reddy has expressed concern over the impact of weakening rupee over the crude prices and their impact on the under recoveries of the Oil Marketing Companies (OMCs). Addressing the Meeting of the Consultative Committee of MPs attached to his Ministry in Mumbai today, Mr. Reddy said, the Government is committed to protect the interests of common man and efforts are being made to minimize the impact of rising crude prices. He informed that to minimize the burden of rise in international prices on consumers, the Government has eliminated the customs duty on crude oil and reduced customs duty on petroleum products by 5%. Excise duty on diesel has also been reduced by Rs 2.60 per litre.

The Minister added that the exchange rate which was Rs 46 per US dollar at the beginning of September 2011 is now hovering around Rs 49. He added that weakening by every Re 1, impacts the cost of diesel, PDS kerosene and domestic LPG by Rs 8,000 crores per annum. The Minister said that the under recoveries have affected the financial health of OMCs, and diminishing cash flows have reduced resource generation for expansion and modernization. The Minister said good financial health of OMCs is a pre-requisite for ensuring long term energy security in the country.