The Hindu Business Line : LPG revenue loss may go up by 50%

Loss inevitable
Despite the recent retail price hike of auto fuel, the public sector oil marketing companies expect to lose about Rs 2.50 a litre on petrol and Rs 1.80 a litre on diesel for the second fortnight of July.

Our Bureau

New Delhi, July 10

Even if crude oil prices are falling, the expected revenue loss on LPG may prove to be a dampener for the oil marketing companies.

The companies feel that loss on selling cooking gas at highly subsidised prices will result in the losses going up by almost 50 per cent from the existing level of Rs 96.98 a cylinder incurred by the companies in July.

The international LPG prices have also hardened.

Despite the recent retail price hike of auto fuel, the public sector oil marketing companies (OMCs) expect to lose about Rs 2.50 a litre on petrol and Rs 1.80 a litre on diesel for the second fortnight of July.

The revenue loss on kerosene sold under the public distribution system (PDS) is likely to remain at the same level of Rs 16.01 a litre. The price of petrol and diesel is reviewed fortnightly, while LPG and kerosene are reviewed on a monthly basis.

While the reported statement by the Petroleum Minister, Mr Murli Deora, that the Government will consider reducing the retail prices if crude prices stabilise for sometime between $50 and $60 a barrel was comforting for the consumer, oil industry feels “a time needs to be given for the crude price to settle down in the given band for a decent length of time for the impact to be felt before any decision on lowering the retail price is taken”.

In line with the international crude price movement, the price at which India buys its crude on Thursday stood at $60.84 a barrel.

The Indian basket had hit a high of $71.30 a barrel for the current fiscal on June 11 before softening. The July average (till July 9) of the Indian basket stood at $64.70 a barrel down from the June average of $69.12 a barrel.

The Government had raised the petrol and diesel prices by Rs 4 and Rs 2, respectively, effective July 1. The reason for this increase was the rise in the international crude prices by 75 per cent (from $40 a barrel in December 2008 to $70 a barrel), and mounting monthly revenue loss of oil companies of Rs 2,800 crore on petrol and diesel put together.

The crude prices have since eased. To keep the capex plan and commitments of the OMCs on track and in overall interest of energy security and financial health of oil PSUs the prices were hiked.

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