Shares of public sector oil marketing companies rose by 1.33% to 3.59% at 13:25 IST on BSE on renewed buying.
HPCL (up 3.59% to Rs 418.80), Indian Oil Corporation (up 1.99% to Rs 335.95) and BPCL (up 1.33% to Rs 588.50) edged higher.
The S&P BSE Sensex was down 95.85 points, or 0.37% at 25,569.42
PSU OMCs rose on renewed buying. Brent crude oil prices for September delivery fell 9 cents to $104.50 a barrel in electronic trade today, 7 August 2014. The contract had fallen 2 cents to end at $104.59 a barrel on Wednesday, 6 August 2014.
PSU OMCs suffer under-recovery or revenue loss on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. It is expected that the gap between administered price and market price of diesel would be eliminated by early FY 2015, the Finance Ministry said in its fiscal policy strategy statement on 10 July 2014. The government has already freed pricing of petrol.
The under-recovery on High Speed Diesel (HSD) applicable for first fortnight of August effective 1 August 2014 will go down to Rs 1.33 per litre, declining from Rs 2.49 per litre during second fortnight of July 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the first fortnight of August 2014 declined to Rs 32.98 per litre from Rs 33.07 per litre in last fortnight and Rs 447.87 per cylinder (Rs 449.17 per cylinder in last fortnight) respectively.
Oil Marketing Companies (OMCs), effective 1 August 2014, are now incurring combined daily under-recovery of about Rs 226 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is lower than Rs 261 crore daily under-recoveries during previous fortnight. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 1.39 lakh crore in 2013-14. The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed on 1 August 2014, international prices of crude oil and petroleum products during the second fortnight of July 2014.
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