Oil PSUs to end fiscal with Rs1,32,000 crore under-recoveries
04 Nov 2011
Burdened by subsidies, high cost of crude oil and high borrowing costs, state-run oil marketing companies in India are expected to close the current financial year with under-recoveries of an estimated Rs1,32,000 crore, despite successive hikes in fuel prices.
The average price of Indian basket of crude oil in the current financial year has gone up by 30 per cent to around $110 a barrel, from $85.09 a barrel in 2010-11. The situation has been worsened by the depreciation of the rupee from Rs45 a dollar to over Rs49 a dollar of late.
The under-recoveries of OMCs increase by about Rs8,000 crore annually on account of every Re1 depreciation.
In spite of the increase in retail prices of the three petroleum fuels - petrol, diesel and domestic cooking gas (LPG) – in June this year, and a subsequent reduction in customs and excise duties, OMCs have reported under-recoveries of Rs8.58 per litre on HSD, Rs260.50 per cylinder on LPG and Rs25.66 per litre on PDS kerosene.
The total under-recovery of oil PSUs on sale of the three products for the year is expected to be around Rs1,32,000 crore compared to Rs78,190 crore last year, an official release said today.
For the first half of the current financial year, OMCs have reported under-recoveries of Rs64,900 crore. In spite of a cash support of Rs15,000 crore by the government and a contribution of Rs21,633 crore by the upstream oil companies, the OMCs have declared huge losses for the first half of 2011-12.
The combined losses of BPCL and HPCL for the first half are more than Rs12,000 crore and IOCL is also likely to be in red, if no further cash assistance is announced.
The make matters worse, OMCs have been borrowing at an unprecedented level of Rs1,29,989 crore, necessitated by working capital and dollar requirements for payment on crude imports.
