New Delhi: Losses on sale of diesel at government-controlled rates have hit a record Rs 19.26 a litre, sending state-owned oil companies scrambling for ways to cover the mounting losses.
Diesel as well as domestic cooking gas (LPG) and kerosene prices have not been raised since June last year even though cost of production has jumped nearly 28 percent, industry sources said.
Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) are losing close to Rs 560 crore per day as they sell diesel, domestic LPG and kerosene way below cost to keep inflation under check.
Sources said diesel is being sold at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder.
Losses on diesel are the highest ever, beating Rs 16.16 a litre loss that oil firms incurred in the first half of April.
At current rate, the three firms are projected to lose Rs 192,951 crore in revenues in the financial year ending March 31, sources said.
In addition, they lose about Rs 4.85 a litre on petrol sales, even though prices were freed from government control in June 2010.
Sources said if prices are not hiked, the government will have to come up with other ways to compensate the oil marketing companies for their losses.
For now, the oil companies are resorting to short term borrowings to meet their working capital requirements. Their combined borrowing have touched Rs 1,40,000 crore as against Rs 1,10,000 crore in January this year.
Over the last one year, their interest costs have more than doubled to Rs 10,500 crore from Rs 5,100 crore in 2010-11.
The Oil Ministry wants the Finance Ministry to release cash subsidy for first quarter quickly to tied over the crisis.
The three firms reported a combined revenue loss of Rs 47,811 crore on fuel sales in the first quarter. Of this, upstream firms like ONGC made good Rs 15,061 crore by way of discount of crude oil they sell to them.
The ministry sought cash subsidy for the remaining Rs 32,750 crore but the Finance Ministry has not released any.
In the absence of the subsidy support, IOC reported the highest quarterly net loss by any Indian company at Rs 22,451 crore. HPCL posted Rs 9,249 crore net loss in April-June while BPCL reported a net loss of Rs 8,836 crore.
Oil firms would most likely post net losses even in the second quarter as the logjam in Parliament over coal block allocation has meant that supplementary demands for grants are not approved and no subsidy payout is possible till the next winter session of Parliament in November/December.
First Published: Monday, September 03, 2012, 17:10