The country’s largest oil refining and marketing company, the Indian Oil Corporation (IOC), is taking an additional hit of Rs 8.0 crore a day on account of the government’s decision to reduce the price of petrol and diesel by Rs 2.0 and Rs 1.0 per litre, respectively. This has raised the daily "under- recovery" of IOC to Rs 54 crore, IOC chairman Sarthak Behuria said on Wednesday.
While global crude prices have been ruling high, government-controlled prices in the country have been kept low by making refiners sell at artificially low prices.
"We gain Rs 1.67 per litre on petrol and lose Rs 2.01 a litre on diesel. Kerosene results in an loss of Rs 13.81 per litre, while liquefied petroleum gas (LPG) cylinder results in an under recovery of Rs 132 a cylinder,” Behuria told reporters in Faridabad at the inauguration of a research and development centre.
Behuria admitted that the prospects of the company in the light of these developments "may not be good in the third quarter of the current financial year." The company had posted profits in the first quarter by selling a part of its stake in the Oil and Natural Gas Corporation, and in the second quarter, government bonds to the tune of more than Rs 5,000 crore.
Behuria said it was difficult to predict the financial prospects of the third quarter as there were several "imponderables" such as burden sharing of losses with oil producers ONGC and Oil India Ltd., refining margins, government bonds and inventory management, which collectively have a severe impact on profitability. Current refining margins of IOC are in the vicinity of $ 4.2 per barrel.
Meanwhile, in a major fillip to research and development in petroleum, IOC is all set to deploy its own fluidised catalytic cracking (FCC) technology at its upcoming 15 million tonnes integrated Paradip refinery-cum-petrochemicals complex . An agreement to this effect was signed in the presence of Behuria. The in-house technology IndMax (Indane Maximisation) will help IOC increase LPG production in its refineries by 35 to 40 per cent.
With this technology, the Paradip refinery in Orissa will produce an additional one million tonnes of LPG annually. The technology enables high yields of LPG and high octane petrol by using various refinery streams, including heavy residues and naphtha as feedstock.