Indian Oil Corporation chairman R S Butola has said the company’s profitability would come under further pressure with interest outgo doubling to Rs 5,000-crore-plus this financial year from Rs 2,600 crore last year.
The country’s largest oil company had to borrow more this time to meet the gap arising out of unmet underrecoveries, which are to be reimbursed to the Government of India.
Its borrowings have shot up to Rs 77,000 crore as on date compared with Rs 53,000 crore in March, 2011.
The three public sector oil companies are yet to get the balance Rs 14,000 crore reimbursement towards underrecoveries from the government while the underrecoveries for the third quarter ended December, 2011 touched Rs 33,000 crore, of which IOC’s share stands at Rs 15,000 crore.
The third quarter underrecoveries are higher than the comparable quarter last year, according to him.
However, Butola said in the immediate term the company would not let the ongoing capital expenditure plan suffer due to these factors.
Responding to a question on international oil prices, he said the price of Indian oil basket would be about $110 per barrel this year compared with $85 per barrel last year. Except for the development of situations like Iran, on fundamentals side there was no reason why the international prices should rise, he said.
