Crude oil prices have reached an all time low of $40 a barrel and analysts tracking the sector predict marginal losses for the December quarter for state-run oil companies. This is contrary to huge losses to the tune of Rs 200 crore expected earlier. According to the latest assessment by oil marketing companies, they have started making a profit of Rs 8.18 on a litre of petrol, 90 paise on diesel; however, on kerosene, they are making a loss of Rs 16.48 a litre.
Oil retailers like Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation, which had posted huge losses in the previous quarter of this fiscal, have adopted a wait-and-watch stance despite crude oil touching an all time low. It may be recalled that state-run refiner Indian Oil Corporation posted its largest-ever net loss of Rs 7,047.13 crore in the July-September quarter. Similarly, BPCL posted a net loss of Rs 2,625.17 crore, HPCL also reported a loss of Rs 3,218.92 crore in Q2.
An official from BPCL said, ?The petroleum ministry is likely to seek an additional Rs 30,000 crore worth of oil bonds this fiscal to compensate oil marketing companies for losses on fuel sales at subsidised rates. But unless something on similar lines is announced officially, there is still time for our financials to improve.? He added that though oil bonds compensate oil companies for revenue losses, they do not involve any immediate cash outgo from the exchequer, and thus are deferred payments at best.
Meanwhile, Arvind Mahajan, executive director at consultancy firm, KPMG, said, ?Six months ago, oil companies were underperforming on account of high crude prices. They sought oil bonds from the government to bail themselves out of losses. However, with the crude prices softening, these companies will perform better in the fourth quarter of this fiscal, despite the ministry hinting at a likelihood of a further dip in petrol and diesel prices.? He further added that with crude oil prices softening, even private retailers are planning to open their retail outlets to sell various fuel products.