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Oilcos may lose Rs 80000 crore
April 3, 2010
NEW DELHI: If the current price of crude at around $85 per barrel continues and government does not hike the petrol and diesel prices, the losses of government-owned IndianOil, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) may jump over 66% to Rs 80,000 crore in 2010-11 due to under-recovery.
According to one estimate, these three fuel retailers lost around Rs 48,000 crore on selling petrol, diesel, cooking gas and kerosene below cost in 2009-10. The firming of global crude had led to upward revision in estimates for under-recoveries to Rs 48,000 crore for 2009-10, from earlier projection of Rs 45,000 crore. In 2009-10, losses were lower as crude prices fell due to slowdown in the global economy. But prices are now firming up with recovery in the world economy, a government official said.
According to a company official, IndianOIL, BPCL and HPCL currently sell petrol at a loss of Rs 6.12 per litre and diesel at Rs 4.60 per litre. Sale of Kerosene through public distribution system leads to maximum losses, with an under-recovery of around Rs 18.42 per litre. They also lose Rs 265.27 per cylinder of cooking gas.
According to another estimate, if the price of crude jumps to $100 per barrel, losses of oil companies will touch Rs 1,20,000 crore in 2010-11.Refiners, who sell the final products in markets at lower than the cost of production, are worried over indecision on part of government regarding sharing of losses by the crude producing companies like ONGC. In 2009-10, a part of losses on petrol and diesel has to be met by upstream firms like ONGC as per a prescribed formula and the government is supposed to bear the losses on sale of cooking fuels.
However, government has provided for only Rs 12,000 crore of the total loss of Rs 20,989 crore on the sale of cooking gas and kerosene in the first nine months of 2009-10. The losses further surged in the fourth quarter as the crude prices increased. But the government is yet to make any payment towards this end.
Out of the provisioning of Rs 12,000 crore, IOC would get Rs 7,100.18 crore, BPCL Rs 2,370.77 crore and HPCL Rs 2,529.05 crore.
According to one estimate, these three fuel retailers lost around Rs 48,000 crore on selling petrol, diesel, cooking gas and kerosene below cost in 2009-10. The firming of global crude had led to upward revision in estimates for under-recoveries to Rs 48,000 crore for 2009-10, from earlier projection of Rs 45,000 crore. In 2009-10, losses were lower as crude prices fell due to slowdown in the global economy. But prices are now firming up with recovery in the world economy, a government official said.
According to a company official, IndianOIL, BPCL and HPCL currently sell petrol at a loss of Rs 6.12 per litre and diesel at Rs 4.60 per litre. Sale of Kerosene through public distribution system leads to maximum losses, with an under-recovery of around Rs 18.42 per litre. They also lose Rs 265.27 per cylinder of cooking gas.
According to another estimate, if the price of crude jumps to $100 per barrel, losses of oil companies will touch Rs 1,20,000 crore in 2010-11.Refiners, who sell the final products in markets at lower than the cost of production, are worried over indecision on part of government regarding sharing of losses by the crude producing companies like ONGC. In 2009-10, a part of losses on petrol and diesel has to be met by upstream firms like ONGC as per a prescribed formula and the government is supposed to bear the losses on sale of cooking fuels.
However, government has provided for only Rs 12,000 crore of the total loss of Rs 20,989 crore on the sale of cooking gas and kerosene in the first nine months of 2009-10. The losses further surged in the fourth quarter as the crude prices increased. But the government is yet to make any payment towards this end.
Out of the provisioning of Rs 12,000 crore, IOC would get Rs 7,100.18 crore, BPCL Rs 2,370.77 crore and HPCL Rs 2,529.05 crore.
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