State-run Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have lost about Rs 2,000 crore because of not raising petrol prices in sync with international rates.
"The three firms are losing Rs 4.03 per litre on petrol, a commodity that was freed from government control more than eight months back," an official with direct knowledge of the development said.
The government had in June last year deregulated petrol pricing, giving the three state-run retailers the freedom to fix rates in sync with the cost of crude oil. But following an informal dictat from the government, they have not raised prices to keep inflation under check.
"Since June, the oil companies have chewed up about Rs 2,000 crore losses... Rs 400 crore is what these companies will lose in March alone," he said.
Chief executives of the three firms had recently given a presentation to the Oil Ministry on the quantum of losses they are suffering, but have not been allowed to hike prices despite crude ruling at a two-year high of over USD 100 per barrel.
Oil Secretary S Sundareshan had last week stated, "There is no change in the policy of the government regarding pricing of petrol being market-determined at retail and at refinery gate. Oil marketing companies continue to have the freedom to determine the price of petrol."
The three firms had last hiked petrol price by Rs 2.50 on January 15. Since deregulation of rates in June, the rates have gone up about Rs 7 per litre in five installments to Rs 58.37 per litre.
Besides petrol, the three retailers are losing a record Rs 12.56 a litre on diesel, Rs 24.74 per litre on kerosene and Rs 297.80 per 14.2-kg LPG cylinder.
The three firms are losing a cumulative Rs 392 crore in revenue every day on selling diesel, domestic LPG and kerosene below cost, the official said.
"For the full fiscal, the three are projected to lose Rs 77,645 crore in revenues at current prices," he said.
If prices are not hiked, the government will have to come up with other ways to compensate the oil marketing companies for their losses.
The Oil Ministry wants the Finance Ministry to compensate the oil companies in cash for at least half of their under-recoveries. Upstream oil firms like Oil and Natural Gas Corp (ONGC) will shoulder one-third of the burden.
For the first nine months, the Finance Ministry has approved the release of a cash compensation of Rs 21,000 crore for the three state-run fuel retailers.