The state-run Indian Oil Corporation has requested the government to pay subsidy of R13,600 crore for the first half of current financial year before the company declares the third quarter results. The company also wants the government to reimburse Rs 6,000 crore interest burden on its burgeoning borrowings along with compensation on loss of petrol sales to prevent it from reporting heavy losses in the coming quarter.

Analysts feel the company reported profit in the second quarter based on the government assurance to reimburse the underecoveries and if no such comfort is extended for current quarter in the next few days, the company could report highest-ever quarterly loss, beating the April-June quarter loss of Rs 22,451 crore, the highest ever by a listed company.

?We have been requesting the government that the additional cost on interests and under-recoveries on account of petrol should be compensated. The ideal situation is that government pays us on a monthly basis,? said RS Butola, chairman IOC.

The company is likely to lose R21,000-22,000 crore in revenue in the quarter ending December 31. The under-recoveries for the three oil-marketing companies are expected to be R41,000 crore.

The company’s current borrowings stands at R98,100 crore and is nearing it?s threshold limit of around R1,10,000 crore. Its borrowing stood at R75,000 crore at the end of 2011-12. Till 2010-11, the interest cost was R2,670 crore, but it rose to R5,600 crore in 2011-12. ?This year it will increase around R3,000 crore. This high interest is such a big burden on us that the refinery doesn’t have such kind of profitability,? Butola said.

The company fears the credit rating will be changed to negative and lack of support from the government will affect their capital expenditure plans. ?It is not a healthy situation for us. Our debt-equity ratio has gone up significantly,? he added.

OMCs together absorbed around R10,045 crore under-recoveries on account of petrol since de-regulation. But even after implementation of the market determined pricing, OMCs have been making price revisions of petrol in a guarded manner, absorbing the losses themselves.

It is also facing issues with Air India, which currently operates on cash-and-carry basis, but even after extending the credit period to 90 days, there are dues to the tune of Rs 2,600 crore.