| With crude oil prices touching new all-time highs, the government-owned oil marketing companies have seen their daily losses rise to around Rs 220 crore a day in the first fortnight of October from around Rs 200 crore in the second fortnight of the previous month.
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| "Record crude oil prices have pushed up the revenue loss to new heights," said a senior official with Indian Oil Corporation (IOC), the country's largest marketer of petroleum products.
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| The basket of crude oil that Indian refiners buy was at a record high of $78.88 a barrel on Monday, the latest day for which data is available.
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The basket, which comprises Oman-Dubai sour (high sulphur) grade crude and Brent dated sweet (low sulphur) crude in 59.8:40.2 ratio, has averaged $76.13 a barrel so far this month compared with $74.83 in September and $69.03 in August.
IOC'S RETAIL LOSSES
(Rs/litre) | | | Oct 1-15 | Sep 16-30 | | Petrol | 3.90 | 3.50 | | Diesel | 6.20 | 5.70 | | Kerosene | 14.90 | 14.90 | | LPG* | 195.00 | 195.00 | | *for every 14.2 kg cylinder |
PRICE OF INDIAN CRUDE OIL BASKET
($/barrel) | | Oct avg | 76.13 | | Sep avg | 74.83 | | FY08 avg | 69.92 | | FY07 avg | 62.46 | | FY06 avg | 55.72 | All-time high
(Oct 15, 2007) | 78.88 | Previous all-time
high(Sep 28, 2007) | 78.46 |
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| "Conflict between Turkey and Iraq (there are reports of a possible Turkish military attack against Kurdish separatists in the northern Iraq) are keeping international crude oil prices on the boil. Major crude oil pipelines pass through the northern Iraq and any conflict can possibly disrupt supplies from Iraq," said a Mumbai-based analyst.
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| Global crude oil prices also firmed up to $88 a barrel today, extending the previous day's 3 per cent rally amid fund buying triggered by tension between Turkey and Iraq and anxiety over winter supply.
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| The high crude oil price is putting pressure on the working capital of the oil marketing companies "" IOC, Bharat Petroleum and Hindustan Petroleum "" which is forcing the companies to increase their borrowings.
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| IOC's borrowings in this financial year has already amounted to Rs 26,000 crore. In the last financial year, the company borrowed Rs 27,000 crore.
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| "As the under-recoveries continue to rise, our borrowings will rise as well," the IOC official said.
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| The company is losing Rs 3.90 on every litre of petrol it sells, up 11.4 per cent from Rs 3.50 per litre in the second half of September. Losses from diesel sales are up 8.8 per cent to Rs 6.20 per litre from Rs 5.70 per litre in the second fortnight of September.
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| Diesel sales are almost three times than that of petrol sales.
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| Oil marketing companies calculate their retail losses on petrol and diesel every fortnight. The losses from kerosene and LPG sales are calculated every month. IOC is currently losing Rs 195 for every 14.2 kg LPG cylinder it sells and Rs 14.90 per litre of kerosene.
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| The oil marketing companies have, however, been assured of oil bonds worth Rs 23,458 crore by the government to partly compensate them for their retail losses. The government has estimated that the total revenue losses during the full financial year will be around Rs 54,900 crore.
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| Upstream companies such as Oil and Natural Gas Corporation and GAIL India will bear another one-third of the retail losses of the marketing companies.
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| "The oil bonds will definitely help. Moreover, the strong rupee value against the dollar has also helped us offset some of the effect of the high crude oil prices," the IOC official. |
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