Thanks to the drop in global crude oil prices, the projected losses of the three state-owned oil marketing companies-Indian Oil, Bharat Petroleum and Hindustan Petroleum-for the fiscal 2008-09 have seen a substantial fall from the earlier Rs 2,05,740 crore to Rs 1,65,300 crore at present.
However, the downfall in crude prices is still not sufficient enough to reduce the domestic prices of petrol, diesel and cooking gas. Ruling out any immediate reduction in the prices of petrol and diesel prices, petroleum minister Murli Deora said the losses of the OMCs are still over Rs 400 crore a day despite the softening in international oil prices.
?There is no scope for reducing prices? Oil companies are still making losses,? Deora told reporters on the sidelines of the Indian Oil Foundation Day. The Indian basket of crude oil averaged $111.09 a barrel in the second fortnight of August as compared with $117.37 per barrel in the first fortnight of the month. Based on an average price of the second fortnight of August, retailers are losing Rs 6.31 per litre on petrol, Rs 13.69 on diesel, Rs 31.39 on kerosene and Rs 312.58 per 14.2-kg LPG cylinder. On his part, petroleum secretary, R S Pandey said the OMCs continue to lose money on sale of petrol, diesel, (domestic) LPG and kerosene. ?There has not been so much reduction in global prices to warrant a price cut,? Pandey said.
Till last week, the fuel retailers were losing Rs 7.07 per litre on petrol, Rs 16.22 on diesel, Rs 39.55 on kerosene and Rs 348.89 per LPG cylinder. The three firms are now projected to lose Rs 165,300 crore in full 2008-09 fiscal, down from Rs 184,801 crore projections of last week. A month back the losses were projected at Rs 205,740 crore.
Pandey said the revenue loss of retailers will be fully compensated, through a combination of oil bonds and assistance from upstream firms like ONGC. The Indian basket of crude oil averaged $113.12 per barrel in August, down from $121-122 a barrel average price when the June 4 hike in petrol, diesel and domestic LPG prices was announced.
IOC, the company that controls about 54% of the market, is projected to lose Rs 90,630 crore on fuel sales this fiscal. The company loses Rs 11 crore per day on sale of petrol, Rs 112 crore daily on sale of diesel, Rs 63 crore per day on kerosene and Rs 32 crore per day on LPG.