Hit by unpaid compensation, state-owned Indian Oil Corporation, the country’s biggest oil marketer, has reported an all-time high quarterly loss of Rs 7,485 crore for the quarter ended September 30. This was in sharp contrast to the net profit of Rs 5,294 crore in the same quarter last year.
Net sales for the quarter rose 28 per cent at Rs 88,725 crore.
Briefing the media, chairman R S Butola said, “This has been an unusual year that witnessed significant price upheaval and rupee depreciation.”
The company had to absorb Rs 7,800 crore of unmet losses on the sale of diesel, domestic LPG and kerosene. The company, like the two other government-owned oil marketers — Bharat Petroleum and Hindustan Petroleum — sells diesel, domestic LPG and kerosene at a government regulated price that is way below the desired price. The loss is compensated through a mix of cash subsidy from the government (usually half of the gross loss) and discount on crude oil from upstream companies like Oil and Natural Gas Corporation and Oil India (usually one-third). The rest is absorbed by the oil marketers.
However, the government has not provided any cash subsidy to the fuel retailers for the second quarter. “We had a total under-recovery (revenue loss) of Rs 11,757 crore on selling diesel, domestic LPG and kerosene below cost in the July-September quarter. Of this, Rs 4,300 crore came from upstream companies and we had to absorb the rest,” he said.
At present, the company is losing Rs 8.58 on a litre of diesel, Rs 25.66 on per litre kerosene and Rs 260.50 on a domestic LPG cylinder. Interest expenditure for the quarter rose nearly threefold to Rs 1,484 crore as the company’s borrowings increased to Rs 73,000 crore.
NO ROLL BACK IN PETROL FOR NOW
The company has ruled out a rollback of the recent increase of Rs 1.80 in every litre of petrol price. Butola said, “Based on the previous fortnight’s prices, we should have raised prices by Rs 1.82 per litre on petrol. Owing the 2 paise under-recovery on every litre, the company is now losing Rs 400,000 daily on petrol sales. While international petrol price was down for most of this fortnight, it has increased in last two days. The rupee has weakened further.”
The company will take a call on the need to review prices on November 14-15. “There has been instances in the past when we did not pass marginal under-recovery on petrol. At the end of this fortnight, if we see that losses are significant, we will pass it on to the consumers,” he said.
