New Delhi: State-run Indian Oil Corp. (IOC) on Tuesday said it will report net loss in the third quarter ending 31 December, unless the government compensates it for revenue loss due to selling auto and cooking fuel below cost.
“Q3 will see net loss if compensation is not there,” IOC chairman B.M. Bansal told reporters in the National Capital.
The company lost about Rs 8,500 crore on selling diesel, domestic LPG and kerosene below cost in the October-December quarter. One-third of this may be made up by upstream firms Oil and Natural Gas Corp. (ONGC) and Oil India Ltd but for the rest it is dependent on the government.
IOC, which last week raised petrol price by Rs 2.50 a litre after international crude prices touched $92 per barrel, is losing Rs 6.80 per litre on diesel, Rs 18.66 per litre on kerosene and Rs 366.28 per 14.2-kg LPG cylinder.
The government has so far not given any compensation to the three state refiners—IOC, Bharat Petroleum and Hindustan Petroleum, for 2010-11 fiscal.
“For the full fiscal, we estimate an under-recovery (revenue loss) of Rs 40,600 crore,” he said adding even last week’s hike in petrol price was lower than the desired Rs 3.72 a litre increase needed to make domestic rates at par with their imported cost.
“Our effort is not to fully load consumers (with steep price hikes) in anticipation that crude oil prices will soften down in future,” Bansal said.
IOC, BPCL and HPCL together are projected to lose Rs73,600 crore in revenues this fiscal, 55% of which the oil ministry wants to come from the Union budget. Another one-third would be made good by the upstream firms and the remaining would be absorbed by the fuel retailers.
The three fuel retailers currently lose about Rs 290 crore a day in revenues on selling diesel, domestic LPG and kerosene below the imported cost.
Oil minister Murli Deora had on 8 January met finance minister Pranab Mukherjee to seek immediate release of Rs 10,000 crore in interim compensation to state oil companies.
So far, the finance ministry has committed to make up only one-third of the revenue losses from the budget. For the first half, it has sanctioned but not released, Rs 13,000 crore. Another, Rs 10,000 crore would help oil firms avoid reporting net losses in Q3.
The government had in 2008-09 given Rs 71,292 crore, out of the Rs 103,292 crore total revenue loss on selling fuel below cost. This was 69% of the total under-recovery.