The Hindu Business Line : Oil marketing firms losing Rs 100 cr a day

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New Delhi March 1 Oil marketing companies are losing about Rs 100 crore a day on sale of petrol, diesel, LPG and kerosene through the public distribution system (PDS). This continues even after the Finance Minister, Mr P Chidambaram, cut excise duty on auto fuels from eight per cent to six per cent.

IOC today said that it was losing Rs 52 crore every day on sale of the four petroleum products.

Mr S.V. Narasimhan, Director (Finance), said that in the January-March 2007 period, the company's under-recovery is expected to be Rs 4,000 crore from the sale of these products.

"Of this, how much can we get through bonds from the Government and from upstream firms like ONGC as assistance will determine our net under-realisation," he added.

Speaking to newspersons at the sidelines of a conference organised by Petrofed on the implications of Budget 2007-08 on the oil and gas industry, he said: "We are losing Rs 1.24 a litre on petrol, Rs 1.52 on diesel, Rs 12.73 on kerosene and Rs 173 on every 14.2-kg cylinder of cooking gas."

The Indian crude basket on February 28 stood at $58.41 a barrel. The February average stood at $56.53.

The duty cut is expected to benefit oil retailers by Rs 2,500 crore, with IOC's loss on sales of auto fuels alone expected to decline by Rs 1,250 crore.

However, this benefit is not sufficient to cover cost of production, he added.

The Government has already issued oil bonds worth Rs 19,150 crore to these companies to partly cover for losses incurred during the first nine months.

Another Rs 5,500 crore is expected to be issued before March 31.

IOC's share of these bonds will be about 50 per cent.

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