With non-revision of diesel prices for more than a year, the revenue loss or underrecovery of oil companies on diesel has jumped to a record Rs 17.05 per litre from Rs 13.76 a litre. Based on the previous fortnight pricing trend, losses on kerosene and domestic LPG (liquefied petroleum gas) have also risen sharply to Rs 32.70 per litre (against Rs 28.54) and Rs 347 (Rs 231) per cylinder, respectively. The last hike in all these products was in June 2011.
Diesel accounts for around 60 per cent of the total revenue loss of the oil marketing companies--IndianOil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd. The three companies sell diesel, kerosene and domestic LPG at government-controlled rates and consequently incur huge losses one each of these products.
This is compensated through a cash subsidy from the government and discounts on crude oil from Oil and Natural Gas Corp Ltd (ONGC) and Oil India Ltd (OIL). Currently, the daily loss of these three companies on three products stands at Rs 551 crore, compared to Rs 405 crore in previous fortnight.
In addition, there is a loss of around Rs 4 on per litre of petrol even though the product is decontrolled since June 2010.
In 2011-12, the gross loss of the companies on three products was a record Rs 1.38 lakh crore which was entirely compensated, though with a lag. In the first quarter of the current financial year, the three companies together incurred a revenue loss of Rs 47,811 crore on sale of the three regulated products. Of this, an amount of Rs 15,060 crore (31.5 per cent) was offset in the form of discounts received from ONGC and OIL. However, Rs 32,750 crore is yet to be compensated by the government. This, along with the high interest burden and foreign exchange loss, caused the three companies to post a combined record net loss of Rs 40,947 crore.
Things look no better this quarter as well. If the current situation continues, the gross under recoveries for the current financial year may top Rs 180,000 crore.