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Oil majors' losses may jump up to Rs 79,670 crore

Last updated on: April 02, 2010 13:36 IST

An oil rigIndian Oil Corporation, Bharat Petroleum and Hindustan Petroleum may see losses on fuel sales jump over 66 per cent to Rs 79,670 crore (Rs 796.7 billion) this fiscal.

The three fuel retailers lost Rs 47,960 crore (Rs 479.6 billion) on selling petrol, diesel, domestic LPG and kerosene below cost in 2009-10 fiscal, a top official said.

"The three firms are losing over Rs 211 crore (Rs 2.11 billion) every day," he said. Losses on fuel sales have widened as global oil rates firmed up in March.

IOC, BPCL and HPCL currently sell petrol at a loss of Rs 6.12 per litre, Rs 4.60 a litre on diesel, Rs 18.42 per litre on public distribution system kerosene and Rs 265.27 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 current year," he said.

For FY'10, losses on petrol and diesel are to be met by upstream firms like ONGC and the government was supposed to bear those on cooking fuel. However, the government has not kept its part of the deal.

Of the Rs 29,353-crore (Rs 293.53 billion) loss in April-December period, the upstream firms contributed Rs 8,364 crore (Rs 83.64 billion) to cover for entire shortfall on petrol and diesel.

But of the Rs 20,989-crore (Rs 209.89-billion) loss on LPG and kerosene in the first nine months, the finance ministry has provided only Rs 12,000 crore (Rs 120 billion).

Besides the Rs 8,989 crore (Rs 89.89 billion) uncovered amount of April -December, about Rs 12,000 crore (Rs 120 billion) of revenue loss on LPG and kerosene in January-March quarter also remains uncovered.

The firming of international oil rates had led to upward revision in estimates for under-recoveries (revenue loss) for 2009-10 fiscal to Rs 47,960 crore (Rs 479.6 billion) from earlier projection of Rs 45,000 crore (Rs 450 billion).

The official said IOC, BPCL and HPCL will get only Rs 12,000 crore (Rs 120 billion) to make up for part of the losses on LPG and kerosene in 2009-10.

IOC would get Rs 7,100.18 crore (Rs 71 billion), BPCL Rs 2,370.77 crore (Rs 23.7 billion) and HPCL Rs 2,529.05 crore (Rs 25.29 billion).

The compensation is, however, less than Rs 20,989 crore (Rs 209.89 billion) sought by the retailers to make up for the losses they incurred on selling domestic LPG and kerosene below cost during April-December period.

IOC had sought Rs 12,419 crore (Rs 124.19 billion), BPCL Rs 4,147 crore (Rs 41.47 billion) and HPCL Rs 4,423 crore (Rs 44.23 billion), he said.

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