IOC may post Rs 20,000 cr loss this year

Indian Oil Corporation (IOC) is expected to post Rs 20,000 crore loss this financial year if it is not allowed by the government to raise retail price of petroleum and other petroleum companies agree to share the subsidy burden.

This will be first instance of loss in the history of this public sector unit.

The loss would, however, come down to Rs 14,000-15,000 crore if other oil companies agree to share the subsidy burden.

With the rise in crude prices, IOC's borrowings have gone up from Rs 17,500 crore in the last financial year to Rs 19,000 crore in the first six months of 2005-06.

"With prices of crude ruling at record highs and the government not permitting to increase retail prices, the oil companies expect a loss of around Rs 40,000 crore in this fiscal. Of this, IOC may suffer Rs 20,000 crore loss," Sarthak Behuria, chairman, told reporters here on Monday.

Speaking on the sidelines of IOC's launch of a new range of Servo marine engine oils, Behuria said the company would post a total loss of around Rs 14,000-15,000 crore in the fiscal, even if other oil companies including Reliance agree to share the subsidy burden.

"Crude prices,that were ruling at $37 a barrel last year,have risen to $59-60 in Indian market,"he said.

However, the government is yet to permit any increase in retail prices," he added.

IOC posted revenue losses of Rs 3,200 crore during the quarter ended June 30. It would be around Rs 3,000 crore for the July-September quarter.

According to Behuria, the Centre should permit oil companies to increase their prices and reduce excise duties to help them in stemming the revenue losses.

A price hike of Rs 5-6 per litre is sought for motor spirit and high speed diesel. However, a modest hike of by Rs 2-3 would also help in reducing losses.

Kerosene was the worst affected, with prices ruling at Rs 9 a litre compared with Rs 11 and Rs 12 in the neighbouring markets of Nepal, Bangladesh and Pakistan, he said.