BackSlipping under-recoveries
Losses of oil firms are expected to decline considerably next fiscal, as losses on diesel are expected to be nil because of regular price hikes
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Brent crude price has declined to $101.9 per barrel from a high of $113.71 seen in June because of muted demand and an increase in supply. The accompanying chart shows Motilal Oswal Securities Ltd’s projections of gross loss incurred for selling fuels below cost at different exchange rates and crude prices for the year ending 31 March 2016.
These losses are expected to decline considerably next fiscal year, as losses on diesel are expected to be nil because of regular price increases. In fact, stocks such as Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd and Indian Oil Corp. Ltd have gained since April in anticipation of lower losses.
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