Oil marketing companies expect the government to increase petrol prices since the industry is incurring a huge loss daily and the borrowing powers are limited, according to RS Butola, chairman of Indian Oil Corporation Ltd .
Speaking to reporters on the sidelines of the annual general meeting of Chennai Petroleum Corporation Ltd (CPCL), Butola said, “Borrowings are based on the rating of the rating agencies and under prudent banking norms. There is a limit for it and we believe that the government would support the companies to raise money for the operations.”
The borrowing of IOCL, at present, is around Rs 90,000 crore. The industry has an underrecovery of around Rs 2.05 crore. IOCL is facing a loss of Rs 297 crore daily and the loss for the industry as a whole is more than Rs 500 crore a day, he added.
In petrol, the companies are facing a loss of around Rs 17 crore a day, and in diesel, it is Rs 17 per litre, he added.
“The underrecovery is a matter of concern since it is growing rapidly. We hope the government would look into the pricing structure and take adequate steps,” he said.
Regarding the talks on deregulation of diesel prices, he said it was considered along with the petrol price deregulation in 2010, but was not implemented. However, the sense of such a deregulation had not been withdrawn, and is a question of timing.
Addressing the shareholders, he said CPCL was looking at expansion of capacity of Manali refinery to 17.5 million metric tonne per annum (mmtpa) by installing a 6-mmtpa unit with matching secondary processing facilities, which would require an investment of more than Rs 10,000 crore.
The company is also awaiting environmental clearance for resid upgradation for improving distillate yield of the refinery. This had been delayed mainly due to the ban imposed by the Ministry of Environment and Forest on new investments in the Manali industrial region. The project is expected to come up with an investment of around Rs 3110.36 crore and would be ready in 33 months from the date of environmental clearance.
It is also looking at replacing the existing 30-inch crude oil pipeline from Chennai Port to Manali refinery with a 42 inch pipeline at a cost of Rs 126 crore.
All engineering activities had been completed and the Coastal Regulatory Zone clearance is awaited for the project, he added.
