HPCL, BPCL to post losses
Two public sector oil marketing companies may post losses in spite of the Rs 11,500 crore oil bonds issued by the Finance Ministry.india Updated: Apr 19, 2006 01:25 IST
Two public sector oil marketing companies — Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) — may post losses in spite of the Rs 11,500 crore oil bonds issued by the Finance Ministry to enable the state-owned oil majors to recover under recoveries.
Apart from the oil bonds, the oil marketing companies, including Indian Oil Corporation (IOC), have been recipients of Rs 14,000 crore assistance from upstream companies.
Estimates available with the government reveal that there is still a need to provide additional support to HPCL and BPCL, in case these companies were to remain profitable.
As per the option being explored, it is suggested that the bond amount of Rs 11,500 crore and the upstream assistance of one-third of the total under recoveries of Rs 13,198.16 crore is allocated across companies based on gross under recoveries. This way Rs 24,698.16 crore would be allocated at the first stage.
The remaining upstream assistance, of Rs 801.84 crore, is allocated in the ratio of gross under
recoveries between HPCL and BPCL. Petroleum minister Murli Deora, after detailed discussions with his officials, is reported to have favoured this method of spreading upstream assistance. A final decision on the issue may, however, await Cabinet approval, sources told the Hindustan Times.
Officials, however, say, in spite of the new upstream allotment formula, HPCL and BPCL would not be in a position to pay any dividend.
The Petroleum Ministry has already allocated Rs 11,500 crore oil bonds issued by the Finance Ministry. As per available estimates, Indian Oil Corporation and its subsidiary IBP have been allotted bonds to the tune of Rs 6,992.02 crore in two tranches - while HPCL got Rs 2,344.86 crore, BPCL was given Rs 2,163.12 crore.
A major chunk of the upstream burden, amounting to nearly Rs 12,000 crore, is being shouldered by Oil and Natural Gas Corporation (ONGC). Oil India Ltd and GAIL (India) Ltd are the other contributors to upstream assistance on the basis of previous year’s audited results.
However, GAIL is not expected to contribute towards under recoveries on account of petrol and diesel.