With the government likely to release Rs 15,000 crore in oil subsidy by March 31, the three government-owned oil marketing companies (OMCs) —IndianOil, Hindustan Petroleum and Bharat Petroleum — will be able to scale down their Rs 135,000 crore combined borrowing.
The pace of borrowing could reduce if the government allowed them to increase the retail price of diesel and cooking gas to partly offset the losses due to selling these two and kerosene at state-set prices.
The delay in grant of cash compensation from the government on capped sale of these three petroleum products drives the borrowings, which these three use for funding working capital requirement. IndianOil, the biggest oil marketer, has borrowings of Rs 78,000 crore. This had recently peaked to Rs 83,000 crore. HPCL’s borrowings recently touched an all-time high of Rs 31,000 crore, surpassing the earlier record of Rs 28,000 crore in 2008 when crude oil had hit an all-time high of $147 a barrel. Their current borrowing is around Rs 30,000 crore. BPCL has a borrowing of Rs 27,000 crore.
| HOW THEY STACK UP | ||
| Company | Losses in April-Dec FY11-12 | Current underrecovery for the industry |
| IOC | Rs 8,716 cr | Diesel- Rs 13.10/litre |
| HPCL | Rs 3,720 cr | Kerosene- Rs 28.76/litre |
| BPCL | Rs 2,651 cr | Domestic LPG- Rs 39/cylinder |
| Source: Bombay Stock Exchange, Petroleum Planning and Analysis Cell | ||
IndianOil’s director (finance), P K Goyal, said the borrowings would soon come down by Rs 8,000 crore. “The industry will get actual cash release of Rs 15,000 crore that was announced in the supplementary to the (Union) Budget. Of this, IndianOil will get around Rs 8,000 crore.” The companies have already accounted for the Rs 15,000 crore while declaring their third quarter results. However, Goyal said the company is hoping for release of more cash compensation before they declare their annual and fourth-quarter results.
For the first nine months of this year, the companies have been compensated 84 per cent of the revenue loss of Rs 97,313 crore on diesel, kerosene and domestic LPG but companies are seeking full compensation for the year. The three companies together reported a net loss of Rs 15,000 crore in the nine months.
There has been a continuous increase in crude oil prices, with the Indian import basket at $120-125. A weak rupee has compounded the situation.
