IOC losing Rs 79 cr per day on selling fuel below cost

Last Updated: Wednesday, September 16, 2009 - 14:03

New Delhi: State-run Indian Oil Corp (IOC),
the nation`s largest fuel retailer, is losing about Rs 79
crore per day on selling auto and cooking fuel below cost.

"International oil prices have softened a bit, resulting
in a marginal reduction in our under-recoveries on petrol,
diesel, domestic LPG and kerosene," an IOC official said.
IOC and sister PSUs - HPCL and BPCL, who have been barred
by the government from revising fuel prices to keep inflation
under check, calculate the desired selling price for petrol
and diesel on 1st and 16th of every month based on the
previous fortnight`s average global oil price.

The three firms currently lose Rs 3.63 per litre on
petrol and Rs 2.33 a litre on diesel. These are lower than Rs
4.69 per litre loss on petrol and Rs 3.09 a litre on diesel
they suffered in the first fortnight of September.

"IOC lost Rs 90 crore per day on fuel sales in the first
fortnight of September. This has come down to Rs 79 crore a
day from today," the official said.
On domestic LPG and kerosene, the desired price of which
is calculated on a monthly basis, the three firms make a loss
of Rs 158.55 per 14.2-kg LPG cylinder and Rs 17.15 on every
litre of kerosene sold.

"At current oil prices, IOC will end the fiscal with a
revenue loss of Rs 23,510 crore and the industry (IOC plus
BPCL and HPCL) will see a revenue loss of Rs 41,440 crore," he
said.

The basket of crude oil India buys from overseas markets
averaged USD 68.07 per barrel in September as against the
August average of USD 71.98 a barrel.

Petroleum Secretary RS Pandey had last week stated that
the government will compensate under-recovery or revenue loss
on sale of domestic LPG and kerosene through issue of oil
bonds.

At current prices, the revenue loss on kerosene would be
Rs 17,000 crore while that on LPG would be another Rs 12,000
to Rs 13,000 crore. These will be met through issue of bonds.

The Rs 10,000 to 11,000 crore under-recovery on petrol
and diesel would be partly met by upstream firms like ONGC by
way of discounts on crude oil and LPG they sell to the three
retailers.

"Oil marketing companies (IOC, BPCL and HPCL) may have to
bear a part of the under-recovery on auto fuels," Pandey had
stated.

Of the Rs 103,292 crore revenue loss on fuel sales in
2008-09 fiscal, 68 per cent was met by the government through
issue of oil bonds. Upstream firms ONGC bore Rs 28,225 crore,
GAIL India Rs 1,781.2 crore and Oil India Ltd Rs 2,936.7
crore.

Bureau Report



First Published: Wednesday, September 16, 2009 - 14:03

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