Petrol, diesel price cuts to raise oil marketing companies' losses

09 December 2008

State-owned oil refiners will see losses from fuel sales rise by 5 per cent during the current financial year ending March 2009, after the government decided to decrease prices of petrol by Rs5 a litre and diesel by Rs2 a litre.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are projected to lose around Rs115,500 crore during the year .

The three refiners reported losses of over Rs13,000 crore during the quarter ended September 2008. The losses were causes by soaring oil prices during the start of the quarter.

Indian Oil posted its largest-ever net loss of Rs7,047.13 crore in the July-September quarter. BPCL posted a net loss of Rs2,625.17 crore in the same quarter on top of a Rs 1,066.70 crore loss in the April-June period, while Hindustan Petroleum reported a loss of Rs3,218.92 crore in the second quarter, on top of Rs888. Rs12 crore in the first quarter.

Public sector oil companies are making a profit of approximately Rs15 a litre from the sale of petrol and Rs3 per litre from diesel sales.

However, the profit being earned on petrol and diesel would not be enough to wipe out the accumulated under recoveries. Moeover, the three oil companies continue to lose around Rs17 for every litre of kerosene they sell and around Rs140 on every cylinder of cooking gas.