State-owned fuel retailers, which last week raised petrol price by Rs 1.80 per litre, reported a net loss of over Rs 8,000 crore in July-September quarter and are borrowing heavily to even buy crude oil.
Hindustan Petroleum (HPCL) last week posted a net loss of Rs 3,364.48 crore in the second quarter while Bharat Petroleum (BPCL) reported a net loss of Rs 3,229.27 crore.
Indian Oil (IOC), the nation's largest fuel retailer, will declare quarterly results tomorrow and analyst estimate a net loss in the range of Rs 1,650 crore to Rs 5,000 crore.
The losses reported in the quarterly earnings are primarily because they lose Rs 333 crore per day on selling diesel, kerosene and domestic LPG at rates which are way below cost of production.
On top of these, they had accumulated a loss of Rs 2,468 crore on selling petrol, a commodity which was decontrolled or freed from government control in June last year. Mounting losses due to rupee dipping below Rs 49 to a dollar from Rs 45-46 earlier this fiscal, led to the fifth hike in petrol price this fiscal.
The losses on fuel sales mean the companies did not generate enough cash to buy crude oil (raw material for making fuel). The shortfall is being met through borrowings, which currently stand at a unprecedented Rs 119,282 crore and equals a fourth of India's borrowing target of Rs 4.7 lakh crore for 2011-12 fiscal.
Oil Minister S Jaipal Reddy had last week stated that under-recovery (revenue loss) on diesel, LPG and kerosene will total to a whopping Rs 132,000 crore for the full fiscal and unless these are made good, the retailers would be bankrupt.
