With the international crude oil prices breaching the $100-a barrel mark in the oil futures market, the Petroleum and Natural Gas Ministry has come under increasing pressure from oil marketing companies (OMCs) for a ‘sharp revision' in the prices of petroleum products, including diesel, domestic LPG and kerosene.
The OMCs, which have postponed the announcement of the third quarter results due to uncertainty over reimbursement of under recovery by the government, are now pushing for immediate price revision to cover the massive losses being incurred by them in the sale of these commodities.
The Indian basket of crude oil ruled at $95.4 a barrel on Monday with the Brent crude touching the $100-mark. “The government has taken a call on all round revision of petroleum prices and that includes diesel, LPG and kerosene,'' an official said.
The OMCs are incurring a loss of Rs.9.23 a litre on sale of diesel. Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) are selling diesel, domestic LPG and kerosene below cost.
“The three retailers, which calculate the desired retail price on 1st and 16th of every month based on the average international price in the previous fortnight, were losing Rs.6.80 a litre on diesel till last week. But this month, the losses have climbed to Rs.9.23 a litre,'' the officials said.
World oil prices stayed above $100 a barrel in Asian trade on Tuesday on fears of escalating turmoil in Egypt and the Arab world at large. There were concerns over disruption of supplies that come through the Suez (NYSE:SZEZY) Canal. The three OMCs are now losing Rs.345 crore in revenue every day on selling diesel, domestic LPG and kerosene below cost.
For the full fiscal, the three are projected to lose Rs.75,507 crore in revenues at current prices.
Besides diesel, IOC, BPCL and HPCL are losing Rs.21.60 a litre on kerosene and Rs.356.07 per 14.2-kg on LPG cylinder.
In addition, they are suffering a loss of about Rs.2.50 a litre on petrol sales, even though the prices were freed from the government control in June last year.
For the first nine months, the Finance Ministry has approved the release of cash compensation of Rs.21,000 crore to the three OMCs.
