The state-owned oil marketing companies--- Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)--- are losing more than Rs 185 crore per day on sale of petrol, diesel, public distribution system kerosene and domestic liquefied petroleum gas (LPG) below international trade parity prices.
In the first quarter of the current financial year (April-June), IOC, BPCL and HPCL together lost Rs 1,553 crore on selling petrol, Rs 4,633 crore on diesel, Rs 4,028 crore on kerosene and Rs 2,698 crore on domestic LPG. As a result, the under-recoveries in the first three months of the financial year were to the tune of Rs 12,912 crore.
For the full year 2007-08, public sector oil firms' losses on sale of petrol, diesel, LPG and kerosene has been estimated at Rs 52,162 crore.
"Since passing on the entire impact of the steep increase in the oil prices to the consumers would have resulted in steep increases in the domestic prices, the government has been taking all possible measures to ensure that there is no hardship to the common man," minister of state for petroleum Dinsha Patel told Lok Sabha in a written statement this week.
He said the government has adopted the principle of "equitable burden sharing" among the three stakeholders - consumers, oil companies and the government. "The government is closely monitoring the international oil prices and will continue to protect the interests of consumers," he said, but did not state clearly whether or not they would be spared from further fuel price hikes.
IOC, HPCL and BPCL have benefited due to the strengthening of the rupee vis-à-vis dollar as they import crude oil for refining. In the first quarter of the current financial year, the gain net of exchange variation on crude liabilities for IOC is estimated to be to the tune of Rs 726 crore. However, upstream majors Oil and Natural Gas Corporation, Oil India Ltd and GAIL have not benefited from the hardening of the rupee.