Financial Daily from THE HINDU group of publications
Wednesday, Oct 02, 2002
Industry & Economy - Petroleum
LPG, kerosene subsidy costs IOC Rs 350 cr per month
NEW DELHI, Oct. 1
INDIAN Oil Corporation (IOC) is losing around Rs 350 crore every month on sale of LPG and kerosene through the public distribution system due to non-revision of product prices in the wake of high global crude prices, according to the IOC Chairman and Managing Director, Mr M.S. Ramachandran.
``We are taking a hit of Rs 300 to Rs 350 crore every month for selling LPG and kerosene at subsidised rates which was putting tremendous pressure on working capital,'' the IOC Chairman, Mr M.S. Ramachandran, told newspersons here.
Although the Union Budget for 2002-03 had provided for a fixed subsidy on kerosene and LPG to oil companies, the subsidy amount has not yet been clarified, he said.
The Budget had allowed for a subsidy payment of Rs 4,495 crore to the oil marketing companies during fiscal 2001, though the actual subsidy is likely to be in the region of around Rs 8,000 crore owing to the spurt in international oil prices since April this year.
So far, the Government has released only Rs 411 crore to IOC for the first two months of fiscal as against a subsidy outgo of close to Rs 700 crore during this period.
On Monday night's hike in retail prices of petrol and diesel, Mr Ramachandran said that oil companies were meeting the costs which involved the production of petrol and diesel even before the hike. ``We are only squeezing our marketing margins.''
While crude oil prices have shot up by 15 per cent this fiscal, the product prices have only moved up 3-4 per cent.
According to Mr Ramachandran, the refinery gate prices were being fixed in line with import parity price and the gross refinery margins were currently around $3.1 per barrel.
During April-September this year, refinery margins averaged $2.8 per barrel as compared to $2.1 per barrel in the same period last fiscal, he added.
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