IOC losing Rs151 cr per day on selling fuel below cost

IOC losing Rs151 cr per day on selling fuel below cost

New Delhi: State-owned Indian Oil Corp (IOC) is losing Rs151 crore per day in revenues on selling diesel, domestic LPG and kerosene below their imported cost, a company official said on Thursday.

“We are losing very heavily on diesel after international oil prices firmed up to $90 a barrel," he said.

IOC is losing Rs6.99 per litre of diesel, Rs19.60 a litre of kerosene and Rs366.28 per 14.2-kg domestic LPG cylinder.

International oil prices have risen as freezing weather in the northern hemisphere has increased energy demand for heating. The spurt has resulted in the difference between domestic retail and international benchmark prices widening.

While the government deregulated petrol prices in June this year, state-owned firms continue to sell diesel, domestic LPG and kerosene below cost to keep inflation in check.

The official said IOC is losing Rs70 crore per day on diesel alone, while the loss on kerosene and domestic LPG is Rs38 crore and Rs43 crore, respectively.

“For the full fiscal, at the current level of international oil prices, IOC will lose Rs40,169 crore in revenues," he said.

Cumulatively, IOC and the two other state-owned oil marketing companies, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), are projected to lose Rs72,812 crore in revenue on subsidised fuel sales in the full 2010-11 fiscal.

Last week a meeting of the Empowered Group of Ministers (EGoM), which was to consider a hike in diesel and domestic LPG prices, was indefinitely postponed on inflation concerns.

Diesel has a weightage of 4.67% in inflation, while LPG contributes 0.91%. A hike now would further accelerate inflation, which is currently at 7.48%.

The EGoM headed by finance minister Pranab Mukherjee was originally scheduled to meet on 22 December but was deferred to 30 December. The meeting was at the last moment deferred without a new date being given.

The panel was to consider at least a Rs2 per litre hike in diesel price and Rs30-40 per cylinder raise in LPG rates.