Public sector oil firms have seen losses on fuel sale widening to about Rs 170 crore per day on firming international oil prices and may end the fiscal with over Rs 49,000 crore in revenue loss.
Indian Oil, Bharat Petroleum and Hindustan Petroleum have seen losses on sale of petrol, diesel, domestic LPG and kerosene inflating from Rs 130 crore to about Rs 170 crore per day, an industry official said.
The three firms calculate the desired retail selling price of the four government-controlled products on 1st and 16th of every month based on average international oil rates of the previous fortnight.
The firming international crude oil prices, which are at a seven-month high of about $73 per barrel, widened losses on petrol to Rs 6.94 per litre from Rs 6.08 per litre in the second half of June. On diesel, the losses have soared to Rs 4.11 a litre from today against Rs 2.96 previously.
The three firms are losing Rs 96.98 per 14.2-kg LPG cylinder and Rs 16.01 on every litre of kerosene.
"Government has to urgently device a means to tackle these losses. The options can be a combination of a marginal price increase in petrol and diesel, issue of Government bonds and contribution by upstream firms like ONGC," he said.
A Rs 2 per litre hike in petrol and Re one a litre increase in diesel rates has been on cards but even this may prove insufficient going by the rising losses.
The government has been mulling decontrolling petrol and diesel prices for some months but may have lost the window as the move would now result in steep rise in fuel prices. Freeing of fuel prices was idle when crude had fallen to below $35 a barrel in December 2008.
The official said that for 2009-10, the three firms together would lose Rs 49,106 crore in revenues on fuel sales.
Till yesterday, the loss on LPG was Rs 69.49 per cylinder and that on kerosene was Rs 12.65 per litre.
Since November, the three had been making profit on sale of diesel - the margin being as high as Rs 6.19 a litre in first fortnight of March. On petrol, they made profits till second fortnight of March and loses thereafter. However, rising global crude prices have eroded the margins on diesel and the three are making losses since June.
The official said IOC, BPCL and HPCL are currently losing about Rs 25 crore per day on sale of petrol, Rs 69 crore on diesel, Rs 57 crore on kerosene and Rs 17 crore on LPG.
With the economic meltdown leading to a sharp drop in crude oil prices from September, state-run fuel retailing companies had made neat profits on petrol and diesel. In the second fortnight of December, the oil firms made Rs 11.48 a litre profit on petrol sales.
Crude prices, which had dropped to below $35 a barrel from Rs 147 per barrel in July 2008, have since risen to $73 per barrel, a seven-month high.
