Underrecovery of oil marketing companies on sale of diesel and cooking gas has touched the lowest point in the current financial year so far.
Since April, the revenue loss on diesel and cooking gas has come down by 36 per cent and 44 per cent, respectively. On its part, the government has maintained that the underrecovery is still high.
In spite of a weakening rupee, the sharper decline in crude oil has brought down underrecovery on the three regulated products — diesel, kerosene and domestic LPG.
In April, the three oil marketing companies — IndianOil, Bharat Petroleum and Hindustan Petroleum — were together losing Rs 563 crore per day on the sale of these three products.
The figure now is Rs 356 crore. The decline is a relief for the companies, which depend on borrowings to fund the underrecovery, as government compensation comes with a lag. A dollar increase in crude oil price, for instance, means an additional working-capital requirement of Rs 350 crore for IndianOil.
On diesel, which accounted for nearly 60 per cent of the total under-recovery in 2011-12, the oil companies were losing Rs 14.36 per litre in early April. This has now come down to Rs 9.18, according to a government press note.
The losses on these three products are compensated through discounts on crude oil sale by Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) besides cash compensation from the government.
Of the Rs 138,541-crore losses in the last financial year, 37.9 per cent was compensated by ONGC, OIL and Gas Authority of India Limited, while the rest came from the government. For 2012-13, the government has provided for Rs 40,000 crore in the Budget towards fuel subsidy.
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June 2011 saw a rise in the prices of these three regulated products. Petroleum minister Jaipal Reddy has sought a meeting of the empowered group of ministers that reviews prices of the three products.
| ON A BRIGHTER NOTE Revenue loss on diesel and cooking gas has come down | ||||
| Date | Under- recovery on diesel (Rs /litre) | On kerosene (Rs /litre) | On domestic LPG (Rs /cylinder) | Daily loss of 3 PSU Oil companies(Rs cr) |
| 1-Apr | 14.36 | 31.04 | 570.50 | 563 |
| 1-May | 13.91 | 31.49 | 480.50 | 518 |
| 1-Jun | 12.53 | 30.53 | 396.00 | 457 |
| 1-Jul | 9.18 | 27.20 | 319.00 | 356 |
| Source:Press Information Bureau | ||||
The meeting is unlikely anytime soon, as former finance minister Pranab Mukherjee, who was the group’s chairman, has become a candidate for the upcoming presidential elections.