IOC, HPCL, BPCL losing Rs 265 cr a day on fuel subsidies

State-owned Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are collectively losing Rs 2.65 billion (Rs 265 crore) per day on selling fuel below cost and may end the fiscal with a Rs 874.4 billion (Rs 87,440 crore) revenue loss.

"International crude oil prices have firmed up in April and retailers are losing a little less than Rs 265 crore per day on selling petrol, diesel, domestic LPG and kerosene," an industry official said. IOC, BPCL and HPCL currently sell petrol at a loss of Rs 6.68 per litre, while the loss is Rs 5.81 a litre on diesel, Rs 18.42 per litre on PDS kerosene and Rs 265.27 per 14.2-kg LPG cylinder.

The official said the three fuel retailers lost Rs 479.6 billion (Rs 47,960 crore) on selling fuel below cost in the 2009-10 fiscal. "This fiscal, under-recoveries (revenue loss) are expected to widen to Rs 874.4 billion (Rs 87,440 crore)," he said.

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 no word for the current year," the official said.

For FY10, losses on petrol and diesel are to be met by upstream firms like ONGC and the government was supposed to shoulder the under-recovery on cooking fuel. However, the government has not kept its part of the deal. Of the Rs 293.53 billion (Rs 29,353 crore) revenue loss in the April-December period, upstream firms contributed Rs 83.64 billion (Rs 8,364 crore) to cover for the entire shortfall on petrol and diesel.

But in the case of the Rs 209.89 billion (Rs 20,989 crore) loss on LPG and kerosene in the first nine months, the finance ministry has provided only Rs 120 billion (Rs 12,000 crore). Besides the Rs 89.89 billion (Rs 8,989 crore) uncovered amount in the April-December period, about Rs 120 billion (Rs 12,000 crore) of revenue loss on LPG and kerosene in the January-March quarter remains uncovered. The official said IOC, BPCL and HPCL have received Rs 12,000 crore to make up for part of the losses on LPG and kerosene in 2009-10. IOC got Rs 71 billion (Rs 7,100.18 crore), BPCL Rs 23.71 billion (Rs 2,370.77 crore) and HPCL Rs 25.29 billion (Rs 2,529.05 crore).