IOC, IBP take Rs 180 cr hit owing to rising oil prices

Indian Oil Corporation (IOC), a Fortune 500 company, and its subsidiary IBP, have made a loss of Rs 180 crore in the last quarter of 2003-04 "" between January and March 31 "" on account of selling diesel (HSD) and petrol (MS) below their international prices.

IOC will also absorb a loss of Rs 1,500 crore for selling LPG as well as SKO at a subsidised rate, lower than the international prices. The government has not allowed the oil companies to raise prices of LPG and SKO since September 2003.

The prices of petrol and diesel are linked to international prices and oil companies revise prices every fortnight. However, despite crude oil prices rising to $38 a barrel in the second week of March, oil companies have not been able to pass on the price hike to customers since the last revision in December 2003. The oil industry is expected to book a loss of over Rs 360 crore on account of depressed prices of petrol and diesel in the three months.

N G Kannan, director (marketing), IOC, said the total loss on account of selling LPG/SKO at a subsidised price was Rs 5,200 crore. "As per the formula, ONGC and GAIL have partly compensate for the loss. However, IOC will have to absorb anywhere between Rs 1,400 crore and Rs 1,500 crore," he said.

Kannan pointed out that for the first time in three years, the corporation registered a growth in the sales of petroleum products in the period October-March. In 2003-04, the company registered sales of 46.23 million tonnes compared with 45.35 million tonnes in 2002-2003 an 46.21 million tonnes in 2001-02.