Oil marketing companies face mounting losses on growing diesel sales

Growing diesel consumption in the country has hit the public sector marketing companies.

The sustained growth in demand for diesel has led Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation has led to under-recoveries of Rs1,806 crore on sale of diesel during April-September 2009.

Public sector oil marketing companies have been suffeering large under recoveries due to the price cap on the sale of fuel products. For instance, they lose Rs2.55 on the slae of every litre of of diesel, Rs17.30 per litre on kerosene, Rs 3.10 per litre on petrol sales and Rs241.00 on each 14.2 kg cylinder of cooking gas.

Incidentally, diesel was the biggest source of under recoveries for IOC, HP and BP last year when global crude prices hit an all-time high of $147 per barrel, leading IOC alone registering a whopping Rs29,000-crore loss.

These oil markeing companies fear a further widening of their under recoveies, or losses, as diesel consumption continues to rise, as the  compensation announced by the centre has yet to materialise even as the three public sector oil marketing companies have borrowed over Rs100,000-crore mark to meet the combined short fall in recoveries.

Till now, these losses, have been partially absorbed by their upstream counterparts ONGC, Oil India and GAIL (India).