OMCs to loose Rs 17,000 crore in Q4
The petroleum ministry has requested the finance ministry for additional payment of around Rs 19,620 crore to the three government-controlled oil marketing companies, Indian Oil (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL), according to a Parliamentary statement given by the ministry.
The ministry said that due to controlled prices of motor and cooking fuels, the three companies have lost about Rs 46,000 crore during the last financial year. Out of this, nearly 70 per cent of the losses – around Rs 31,600 crore, was made on cooking fuels, while the remaining, Rs 14,400 crore, was lost on the sale of petrol and diesel below cost. The losses include the margin that the three companies would like to have as well.
The numbers also imply a much higher loss in the March quarter and point to an even tougher year ahead. The three firms lost around Rs 6,000 crore on petrol and diesel during the March quarter and another Rs 10,700 crore on cooking gas and kerosene during the three months.
Even though the government had promised to stop dictating the prices of petroleum products by 2002-03, these are still set by the government through informal means. Despite an increase in the price of imported crude oil, which supplies around 70 per cent of feedstock for these companies, the government has not allowed them to increase retail prices fearing a political backlash from consumers.
According to the government’s understanding with its petroleum producing and marketing firms, government-owned oil producers, ONGC and Oil India (OIL), are to give subsidies to the three retailers to account for all the losses on petrol and diesel sales as crude prices rise.
Minister of state petroleum, Jitin Prasada, also told Parliament that the deficit on account of motor fuel sales was Rs 8,364 crore for the first three quarters and this has been paid by ONGC and OIL already. Besides this, they are expected to pay another Rs 6,000 crore for the last quarter, while the government has already given a cash subsidy of Rs 12,000 crore, leading to a net loss of Rs 19,620 crore for the full year.
