Deora seeks meeting with FM on revenue loss by oil PSUs | business | Hindustan Times
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Deora seeks meeting with FM on revenue loss by oil PSUs

Oil minister Murli Deora has sought a meeting with finance minister Pranab Mukherjee to discuss precarious finances of state-owned oil firms, as crude oil appears to be inching towards the $100 per barrel mark.

business Updated: Jan 17, 2011 20:17 IST

Oil minister Murli Deora has sought a meeting with finance minister Pranab Mukherjee to discuss precarious finances of state-owned oil firms, as crude oil appears to be inching towards the $100 per barrel mark.

"I have requested finance minister for a meeting tomorrow," Deora said from Mumbai.

Officials however said the meeting has so far not been fixed.

State-owned Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp are losing about Rs 290 crore a day in revenues on selling diesel, domestic LPG and kerosene below the imported cost.

The state firms last week raised petrol price by Rs 2.50-2.54 a litre but are still losing Rs 1.20-1.22 per litre as the hike was insufficient to cover for crude oil that is touching $92 per barrel.

Besides, they are losing Rs 7.65 a litre on diesel, Rs 19.60 a litre on kerosene and Rs 366.28 per 14.2-kg cylinder.

The three firms are projected to lose Rs 73,600 crore in revenues during the 2010-11 financial year, 55% of which Deora wants the finance ministry to meet by way of cash from the central budget.

Deora said he had on January 8 met Mukherjee to seek immediate release of Rs 10,000 crore in interim compensation to state oil companies.

So far, the finance ministry has committed to make up only one-third of the revenue losses from the budget.

"The finance minister has been kind enough to sanction Rs 13,000 crore to cover part of under-recoveries in the first half of the current fiscal. I requested him to release another Rs 10,000 crore for third quarter under-recoveries immediately to help PSUs post decent Q3 results," Deora said.

Without government subsidy, HPCL and BPCL are sure to report net loss in the October-December quarter and IOC too may end the three months in red.

The government had in 2008-09 given Rs 71,292 crore, out of the Rs 103,292 crore total revenue loss on selling fuel below cost.

"This was 69% of the total under-recovery. During the current fiscal, which has also seen hardening of crude prices, we are seeking just 55%," Deora said.

Besides discussing the compensation for the revenue loss, Deora may also raise the issue of cutting customs duty on crude oil to nil from 5% currently to avoid further increase in retail prices.

He may also want the customs duty on diesel slashed to 2.5% from 7.5% at present, along with a reduction in the specific duty imposed on the most-consumed fuel in the country, a hike in prices of which would have cascading effect on already high inflation.