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IOC losses on fuel sales to jump 63% in FY10

IOC losses on fuel sales to jump 63% in FY10
PTI
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First Published: Thu, Apr 15 2010. 03 31 PM IST
Updated: Thu, Apr 15 2010. 03 31 PM IST
New Delhi: State-owned Indian Oil Corporation (IOC) may see revenue loss on fuel sales jump 63% to over Rs42,540 crore in the current fiscal.
“The industry will have an under-recovery (revenue loss) of over Rs79,000 crore,” IOC director (finance) S V Narasimhan told reporters here.
IOC lost about Rs26,000 crore in revenue on selling petrol, diesel, domestic LPG and kerosene below cost in 2009-10. In the current fiscal, its revenue loss is estimated at Rs42,540 crore.
IOC, Bharat Petroleum and Hindustan Petroleum, at current oil prices, stand to collectively lose Rs79,670 crore in revenue this fiscal.
The three fuel retailers lost Rs47,960 crore on selling petrol, diesel, domestic LPG and kerosene below cost in the 2009-10 fiscal.
He said IOC sold oil bonds worth Rs1,300 crore to meet its capital requirement. The company has bonds worth Rs18,000 crore that it had got previously as part compensation for selling fuel below cost.
The rupee appreciation has helped limit the revenue losses, which would have been much higher considering the prevailing crude oil price of over $80 per barrel, he said.
It has also helped the company to save on interest cost on the $3.2 billion foreign currency loan it has.
The interest rate on the foreign currency loan was 5-5.5% and rupee appreciation would help it bring down drastically, he said.
“Rupee appreciation is good for us both in terms of limiting under recoveries and lowering our interest outgo,” he said.
The three retailers lose over Rs211 crore per day on fuel sales. IOC, BPCL and HPCL currently sell petrol at a loss of Rs6.12 per litre, while the under-recovery is Rs4.60 a litre on diesel, Rs18.42 per litre on PDS kerosene and Rs265.27 per 14.2-kg LPG cylinder.
The government has not yet said how it will make up for the projected losses for this fiscal.
“There is an agreed formula to share under-recoveries for 2009-10, but there is lot of uncertainty for the current year,” an official said.
For FY10, losses on petrol and diesel are to be met by upstream firms like ONGC and the government was supposed to foot the loss on cooking fuel. However, the government has not kept its part of the deal.
Of the Rs29,353 crore loss in the April-December period, upstream firms contributed Rs8,364 crore to cover for the entire shortfall on petrol and diesel. But of the Rs20,989 crore loss on LPG and kerosene in the first nine months, the finance ministry has provided only Rs12,000 crore.
Besides the Rs8,989 crore uncovered amount during the April to December period, about Rs12,000 crore of revenue losses on LPG and kerosene in the January-March quarter remain uncovered.
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First Published: Thu, Apr 15 2010. 03 31 PM IST