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We'll raise petrol prices further if needed: IOC

Painting a grim picture of its profitability, leading public sector oil refiner and retailer Indian Oil Corporation (IOC) has said that it may have to raise petrol prices again, or cut down on supplies. Anupama Airy reports

business Updated: Nov 06, 2011 20:28 IST
Anupama Airy

Painting a grim picture of its profitability, leading public sector oil refiner and retailer Indian Oil Corporation (IOC) has said that it may have to raise petrol prices again, or cut down on supplies.

"This is an unusual year where the average price of the Indian basket of crude oil has already averaged $110 a barrel so far, against last year's average of $85 a barrel," chairman and managing director, IOC, RS Butola told Hindustan Times.

"We will have to stall our capital expenditure plans completely if this is the reaction to the price hikes… you are telling us and the government to force us to go into losses… are you ready to face supply cuts," he asked.

Stating that the other two state-owned oil firms - HPCL and BPCL - have already incurred losses, the IOC chairman hinted at a similar trend for IOC, which is to announce its earnings figures for the second quarter next week.

"Let's be realistic. Who will bridge the oil industry's under-recoveries of Rs 1,32,000 crore that have already been incurred on sales of auto and cooking fuels?" he asked.

"Our board is meeting on November 9 to take stock of the company's performance… HPCL and BPCL have already announced losses and let me tell you the situation is not looking encouraging at all for IOC as well."

He said the finances of the oil companies are stretched. "The government is already spending huge amounts on socialistic schemes and we do not expect them to subsidise us for our losses like last year ," Butola said, adding that the only choice now is between maintaining supplies by paying the cost or facing cuts in fuel supplies.

Asked why the companies are aggressively expanding their retail presence amidst huge losses, Butola said despite the "unsual situation" that oil companies face this year, "We (oil industry) continues to spend Rs 7,000 to 8,000 crore on maintenance and repair as also to keep the brand alive."