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Oil Cos Post Mega Loss, Seek Hike In Petrol Price
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Indian Oil Corp (IOC) on 9 August posted the nation's biggest quarterly net loss of Rs 22,451 crore after the government failed to compensate it for capping auto and cooking fuel prices.
Simultaneously, Hindustan Petroleum Corp Ltd (HPCL), the nation's third largest fuel retailer, also posted a net loss of Rs 9,249 crore in April-June, the second biggest quarterly loss by a listed corporate.
Bharat Petroleum Corp Ltd (BPCL), India's second largest fuel retailer, will report quarterly earnings on 10 August and is likely to post over Rs 9,000 crore of net loss.
With losses widening to Rs 3.56 per litre, public sector oil firms on 9 August sought an immediate hike in petrol price but were unsure if the government will allow them to do so. (Read: Oil Cos Seek Immediate Hike In Petrol Price)
State-owned oil firms had last hiked petrol price by Rs 0.70 per litre with effect from July 24 and since then global oil rates have soared more than $12 per barrel.
"We are losing Rs 1.37 per litre on petrol based on the average price of benchmark gasoline rates in the Singapore market in the previous fortnight. But current calculations based on oil price this month will be about Rs 3.56 a litre," said R S Butola, Chairman, Indian Oil Corp, the nation's largest fuel retailer.
The government has in the year not compensated oil firms for selling diesel, domestic LPG and kerosene below cost this year as the Rs 40,000 crore fuel subsidy it had budget has all been exhausted in paying compensation for last fiscal.
IOC, which like other retailers is living off borrowed money, warned that it may soon exhaust the limit to which it can take debt and sourcing crude oil (raw material for making petrol, diesel and other petroleum products) would become difficult as international sellers don't give credit.
The three state-run fuel retailers are losing about Rs 710 crore per day on selling diesel, domestic cooking gas (LPG) and kerosene at government controlled rates which are way below market price.
Besides, the government's "inflationary concerns" have not allowed them to raise price of petrol - a fuel that was deregulated in June 2010 - even though they are losing over Rs 3 per litre.
IOC Chairman R S Butola said the government should realise that oil firms are on the brink and fuel subsidies need to be addressed urgently.
The three fuel retailers are projected to lose a record Rs 177,715 crore this fiscal as they sell diesel at a discount of Rs 12.13 a litre to its cost, kerosene at Rs 28.54 and LPG at Rs 231 per 14.2-kg cylinder discount.
Butola said IOC's borrowings also rose because the government has not released Rs 4,800 crore out of the Rs 20,800 crore of fuel subsidy promised for 2011-12 fiscal.
Besides losing Rs 383 crore per day on sale of diesel, domestic LPG and kerosene at government controlled rates, IOC is also losing Rs 1.37 per litre on petrol - a commodity which was deregulated in June 2010.
The company lost Rs 25,526 crore in revenue on selling diesel, domestic LPG and kerosene during April-June quarter.
Of this, it got Rs 8,041 crore from upstream firms but the government failed to provide Rs 22,451 crore on fuel subsidy.
Together with Rs 950 crore of loss on petrol, the company's revenue loss on fuel sale in April-June quarter was Rs 18,435 crore.
Its turnover rose 12.4 per cent to Rs 101,936 crore in April-June period from Rs 90,713 crore a year earlier.
Butola said the company sold 19.443 million tonnes of products. "Our quarterly refining throughput was 13.579 million.