IOC losing Rs297 crore every day due to under-recoveries

IOC losing Rs297 crore every day due to under-recoveries

New Delhi: State-owned Indian Oil Corporation (IOC) is losing Rs297 crore per day on selling diesel, domestic LPG and kerosene at government-controlled rates, a company official said here.

“We are losing Rs18.11 per litre on diesel, Rs28.33 a litre on kerosene and Rs315.86 per 14.2 kg domestic LPG cylinder," he said.

IOC loses Rs196 crore everyday on selling diesel below its imported cost, Rs53 crore on kerosene and Rs48 crore on domestic LPG.

Diesel prices were last revised in June last year when crude oil was around $71-72 per barrel. It is trading at $110 a barrel now. Domestic LPG and kerosene rates too were revised last in June 2010.

The government has not allowed oil companies to raise fuel prices in line with imported cost to keep inflation under check.

“Retail selling price of diesel in Delhi should have been Rs55.86 a litre as against Rs37.75 per litre currently," the official said.

IOC along with public sector firms Hindustan Petroleum and Bharat Petroleum are projected to lose Rs1,77,562 crore in revenues on selling diesel, domestic LPG and kerosene below their imported cost in 2011-12 fiscal.

The revenue loss, termed as under-recovery by oil firms, will be the highest-ever, even more than what they lost in 2008-09 when crude oil touched an all-time high of $147 per barrel.

In addition, they lose about Rs4.50 per litre on petrol, whose rates have not moved in tandem with the imported cost despite its pricing being freed from the government control in June last year.

“Losses on petrol are not included in the under-recovery figures for 2011-12 as it is a decontrolled commodity," the official said.

The basket of crude oil India buys had averaged $83.57 per barrel in 2008-09 and calculations for the next fiscal have been done at the prevailing rates of around $110 a barrel.

“The average price of Indian basket of crude oil last fiscal was $85.09 per barrel, higher than the 2008-09 average when the government had cut customs and excise duty on crude oil and products to check the impact of rising international rates on domestic markets," the official said.

Finance minister Pranab Mukherjee has not agreed to cut customs and excise duty on crude and product this time to protect his projected fiscal deficit.

“The situation in the current 2011-12 fiscal will be worse, the three PSU oil marketing companies are losing Rs540 crore per day on diesel, domestic LPG and kerosene sales," the official said.

In 2008-09, the government had issues oil bonds worth 71,292 crore to the three firms to make up for more than two-thirds of the ,03,292 crore revenue loss. Upstream oil firms like ONGC provided another 2,000 crore.

In the 2010-11 fiscal, the three firms lost Rs78,202 crore, but so far the government has provided only Rs20,911 crore in compensation.

The oil marketing firms lost Rs2,227 crore on selling petrol below imported cost between April and June before its price was freed from the government control.

They lost Rs34,384 crore on sale of diesel, Rs19,566 crore on PDS kerosene and Rs22,025 crore on sale of domestic LPG.