New Delhi: State-owned oil marketing companies are virtually living off borrowed money as their losses on auto and cooking fuel sales have forced them to take loans to meet even day-to-day expenses.
Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) have seen their combined borrowings rise by 24 percent to Rs 120,000 crore at the end of August from Rs 96,700 crore in March this year, an Oil Ministry official said here on Thursday.
IOC alone has seen its borrowings jump from Rs 52,700 crore to Rs 71,000 crore. The borrowings, mostly short-term in nature, are to meet working capital requirements.
"International crude oil prices are ruling at around USD 110 per barrel. Matters have been made worse by the rupee dipping to an almost two-year low against the US dollar, which raised the cost of importing oil," he said.
Oil firms are not just losing money on diesel, LPG and kerosene, but also on decontrolled petrol, as domestic rates have not moved in tandem with the imported cost.
"They are losing Rs 2.61 per litre, or Rs 15 crore per day, on the sale of petrol. Together with local taxes, the hike needed to level domestic rates with international prices is about Rs 3 per litre," the official said.
IOC, BPCL and HPCL have lost Rs 2,450 crore this fiscal on selling petrol -- whose rates were freed from government control in June last year -- below the imported cost.
"At the current rate, oil firms will accrue another Rs 2,850 crore loss on the sale of petrol, taking the total loss on a fuel that was freed from control to Rs 5,300 crore for the full fiscal," he said, adding that hiking retail prices may be the only option left.
Besides petrol, the three firms are losing Rs 263 crore per day on selling diesel, domestic LPG and kerosene below cost. Diesel is being sold at a subsidy of Rs 6.05 a litre and kerosene at a discount of Rs 23.25 per litre, while domestic LPG is under-priced by Rs 267 per 14.2-kg cylinder.
"The industry lost around Rs 65,000 crore in the first half of the current fiscal on the three products and for the full year, the revenue loss is estimated at Rs 121,571 crore at the price of Indian basket at USD 110 per barrel," he said.
The rupee fell to an intra-day low of Rs 48 per dollar on Wednesday. "Every rupee depreciation, the under-recovery (revenue loss) increases annually by around Rs 9,000 crore," he said, underscoring the need for action on the price front on all three products.
The three firms had last raised petrol price by Rs 5 a litre in May. Diesel, domestic LPG and kerosene prices were hiked in June by Rs 3 per litre, Rs 50 per cylinder and Rs 2 per litre, respectively.
First Published: Thursday, September 15, 2011, 15:16