The state-owned Indian Oil Corporation may see revenue loss on fuel sales jump 63 per cent to over Rs 42,540 crore (Rs 425.40 billion) in the current fiscal.
"The industry will have an under-recovery (revenue loss) of over Rs 79,000 crore," S V Narasimhan, director (finance), IOC said.
IOC lost about Rs 26,000 crore (Rs 260 billion) 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 Rs 42,540 crore. IOC, Bharat Petroleum and Hindustan Petroleum, at current oil prices, stand to collectively lose Rs 79,670 crore (Rs 796.70 billion) in revenue this fiscal.
The three fuel retailers lost Rs 47,960 crore (Rs 479.60 billion) on selling petrol, diesel, domestic LPG and kerosene below cost in the 2009-10 fiscal. He said IOC sold oil bonds worth Rs 1,300 crore to meet its capital requirement.
The company has bonds worth Rs 18,000 crore (Rs 180 billion) 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 per cent 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 Rs 211 crore (Rs 2.11 billion) per day on fuel sales.
IOC, BPCL and HPCL currently sell petrol at a loss of Rs 6.12 per litre, while the under-recovery is Rs 4.60 a litre on diesel, Rs 18.42 per litre on PDS 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 the current year," an official said.
For FY'10, 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 Rs 29,353 crore loss (Rs 293.53 billion) in the April-December period, upstream firms contributed Rs 8,364 crore (Rs 83.64 billion) to cover for the entire shortfall on petrol and diesel. But of the Rs 20,989 crore loss (Rs 209.89 billion) 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 during the April to December period, about Rs 12,000 crore (Rs 120 billion) of revenue losses on LPG and kerosene in the January-March quarter remain uncovered.
