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IOC under-recovery Rs 96 cr every day

Indian Oil Corporation is facing an under recovery of Rs 96 crore every day by selling petrol, diesel, kerosene and cooking LPG below cost, reports Deepak Joshi.

business Updated: Oct 30, 2007 23:05 IST
Deepak Joshi

The country’s largest refiner and marketing company Indian Oil Corporation is facing an under recovery of Rs 96 crore every day by selling petrol, diesel, kerosene and cooking liquefied petroleum gas below cost.

“Under recovery on petrol is Rs 3.90 per litre, Rs 6.22 for diesel and Rs 15.99 for kerosene. A cylinder of cooking liquefied petroleum gas has an under recovery of Rs 174.17,” IOC Chairman and Managing Director S Behuria said.

Behuria warned that under recoveries could shoot up further to Rs 121 crore a day from November if the prices of key petroleum products were not revised.

“The under recoveries are expected to go up to Rs 4.94 per litre for petrol, Rs 6.50 for diesel, Rs 16.42 for kerosene and Rs 207 per LPG cylinder,” he said.

Behuria said that the one-third burden sharing arrangement — where the upstream companies, oil bonds and the consumer share the burden equally — should be implemented. “I want the burden sharing arrangement to be implemented. The consumer should also bear a third of the burden,” he added.

The government has decided to compensate oil marketing companies through oil bonds to the tune of 42.70 per cent of their under recoveries, while 35 per cent of the burden would be borne by the upstream companies — Oil and Natural Gas Corporation, GAIL (India) and Oil India Limited. Oil marketing companies are expected to face the remainder in under recoveries as the government is not inclined to revise retail prices of mass consumed petroleum products.

Net profit up 32 per cent

Announcing the company's second quarter results, Behuria announced a 32.39 per cent increase in net profit at Rs 3,817.75 crore for the quarter ended September 30, compared with Rs 2,883.59 crore for the corresponding period last year. Total income of the company increased by 1.80 per cent to Rs 58,457.23 crore for the quarter under review, compared with Rs 57,418.49 crore for the same period a year ago.