Oil PSUs suffer losses despite heavy demand

The demand for oil products has remained strong in the period up to September this year, according to data gathered from the petroleum ministry and Opec.

Despite the strong demand trend, public sector oil companies have been grappling with a difficult operating environment because of surging under-recoveries due to the government's reluctance to raise retail fuel prices.

For instance, during the nine-month period, the daily consumption of liquefied petroleum gas (LPG) in the country was 355,000 barrels per day, a rise of 9.2 per cent year-on-year while the government-run companies suffered losses of Rs 175-200 per cylinder in the quarter ended September, point out analysts.

For other oil products, like kerosene, used by the aviation sector, the daily demand was for 289, 000 barrels per day (bpd) between January to September 2007, a rise of 3.2 per cent. Meanwhile, the daily consumption of petrol was 232,000 bpd, a rise of 10.6 per cent.

In the case of diesel, the daily consumption was 965,000 bpd, a rise of 7.9 per cent.

In the September quarter, public sector oil marketing firms lost nearly Rs 4.5 a litre on petrol while in the damages were Rs 6.5 per litre of diesel.

The total demand for oil products in the country was 2,738,000 bpd in the January-September period, a rise of 4.4 per cent. It is understood that nearly 65-70 per cent of the country's annual crude oil requirements are imported and refined locally.