In what is being seen as a big positive for the Indian oil industry, the daily under-recoveries of the three state-owned oil marketing companies on sales of petrol, diesel, LPG and kerosene, for the first time this fiscal, stand completely wiped out from over Rs 60 crore a day a fortnight back.
Starting December 1, the three state-owned oil companies will start making positive margins of Rs 30-40 crore a day on domestic sales of these four sensitive products.
Speaking to FE, the chairman and managing director of the country?s largest oil refining and marketing company, Indian Oil Corporation, Sarthak Behuria said the daily losses of IOC on the sales of the four products have come down to just Rs 5 crore a day.
The margins on petrol and diesel, starting December 1, have increased substantially to Rs 15 per litre and Rs 3 per litre respectively as against Rs 8.17 and Rs 0.65 a litre in the last fortnight. Losses on LPG, too, have narrowed down from Rs 338 per cylinder to just Rs 140 a cylinder. Kersoene losses, however, are still higher at Rs 19 a litre as against Rs 21.54 a litre last fortnight.
?As IOC sells kerosene more than the other two oil companies, its losses on the sales of the four sensitive products will be around Rs 5 crore a day but for the industry as a whole (combined sales by IOC, HPCL and BPCL), the existing daily industry losses on sales of these four products will turn positive starting December 1. The over-recoveries could be around Rs 600 to 1,000 crore a month,? Behuria said.
The improved margins have strengthened the case for bringing back the domestic fuel prices to pre June levels. In June, when crude oil prices had skyrocketed to $147 a barrel levels, the oil companies had increased petrol prices by Rs 5 a litre, diesel by Rs 3 a litre and cooking gas by Rs 50 per cylinder. The petroleum minister Murli Deora has already indicated that domestic fuel prices will be revised only after the assembly elections after December 24.
However, despite the state owned oil marketing companies making positive margins on domestic fuel sales, the gross under-recoveries of the OMCs for the fiscal is still estimated at Rs 1.1 lakh crore. After taking into account the assistance from the government by way of oil bonds as also the upstream assistance, the net under-recoveries are still estimated at around Rs 25,000- 30,000 crore. The petroleum ministry has already sought additional oil bonds from the finance ministry (over and above the Rs 50,000 crore oil bonds agreed upon for the current fiscal.)
Neighbouring countries like Pakistan are also mulling a cut in the prices of petrol and diesel following the sharp decline in global crude oil prices. The Oil and Gas Regulatory Authority of Pakistan has suggested a reduction in the petrol prices by Rs 8 a litre and that of diesel by Rs 5. The proposal is under consideration of Pakistani PM Syed Yousuf Raza Gilani.