Indian Oil expects Rs73,605-cr loss as borrowings rise to Rs79,000 crore

Public sector giant Indian Oil Corporation (IOC), which has seen its borrowings rise to over Rs79,000 crore, expects to end the fiscal with a record loss of Rs73,605 crore.

R S Butola, chairman, today told reporters that the company is losing Rs227 crore every day by selling diesel, kerosene and domestic LPG at below market rates.

IOC, along with the other two state-owned oil marketing firms - Bharat Petroleum and Hindustan Petroleum - is forced to sell fuel (except petrol) at controlled rates. The three firms lose Rs13.53 on the sale of every litre of diesel, Rs29.99 on a litre of kerosene and Rs287 on the sale of a 14.2-kg LPG cylinder.

The three state undertakings are expected to lose a record Rs137,605 crore in the fiscal ending 31 March 2012, because of under-recoveries.

However, with parliament passing the Appropriation bill - allowing the government to incur an additional expenditure of Rs63,000 crore - on Tuesday, Butola was hopeful that the government would give about Rs16,000 crore as compensation for the under-recoveries. The government will have to pay Rs30,000 crore to the three oil refiners as compensation. 

While crude oil prices continue to rule at over $100 a barrel, the woes of the oil refiners have worsened with the sharp fall in the Indian rupee. On Tuesday, the rupee closed at a record low of 53.23/24 to the dollar, after hitting a lifetime low of 53.29 (See: Rupee hits 53.40 a dollar as stock markets turn choppy). The slide in the value of the rupee has made crude oil imports dearer for the three firms.