Under recovery: IOC to take Rs 3610 cr knock

Indian Oil Corporation (IOC) is expected to take a hit of Rs 3,610 crore in two month- April and May 2005 - on account of under recovery of prices of liquified petroleum gas (LPG) and kerosene (SKO) besides under realisation of prices on sale of petrol and diesel.

NG Kannan, director marketing, IOC told media persons here today "in 2004-05, IOC had additional burden of Rs 6,588 crore on under-recovery of prices of LPG and SKO and Rs 1189 crore for under realisation of price of petrol and diesel."

Kannan was speaking at the sidelines of the company's performance highlights for 2004-05.

When asked whether oil PSUs have decided to stop the sale of LPG and kerosene due to under recovery of prices, Kannan pointed out that "the oil companies were merely regulating and tightly monitoring distribution of LPG and kerosene from the dealers so that there is no diversion of the same for industrial purposes. In April, the growth of LPG sales has been only three per cent."

On IBP being merged with IOC, Kannan said that the company will continue with IBP Red and IBP brand while IBP's consumer and LPG division will be merged with IOC.

"IOC's policy regarding LPG and consumer division are already being extended to IBP."

Regarding merger ratio, Kannan said its a inter-ministerial note and we have yet to receive communication.

Meanwhile, IOC has chalked out a Rs 2,770 crore capital outlay on infrastructure in 2005-06. This includes Rs 1,125 crore expenditure on setting up retail outlets , Rs 1,012 crore on LPG, Rs 360 crore on its other operations and Rs 273 crore on other.

Kannan said : "IOC will add 1,000 new retail outlets and another 1,000 low cost retail outlests called Kisan Sewa Kendras (KSK). For these kendras we have signed a memorandum of understanding with ICICI ."