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Our Bureau

Chennai, May 15 The Chairman and Managing Director of Indian Oil Corporation, Mr Sarthak Behuria, has said that the current year would be a “nightmare” in terms of under-recoveries, and said that no oil company would be able to bear the losses unless the Government took some measures.

At a press conference here on Thursday, Mr Behuria said that in 2007-08, IOC would have to contend with under-recoveries of Rs 9,600 crore. (The company is yet to close its books for the year.)

He said that the total losses of the industry amounted to Rs 77,000 crore. However, the Union Government, taking a different basis for estimating the under-recoveries, accepted only a figure of Rs 70,000 crore and said it would compensate 50 per cent of it through oil bonds. Upstream oil companies (ONGC) would bear a third of the burden.

The net burden of oil companies worked out to around Rs 17,000 crore. IOC’s share of this would work out in the neighbourhood of Rs 9,600 crore, Mr Behuria said.

(Of course, IOC would make profits from other products, such as petrochemicals and naphtha and could report a net profit on the overall.)

That was the story as regards 2007-08. But in the current year, with crude prices having risen to over $120 a barrel, the total under-recoveries of the industry would be as high as Rs 200,000 crore, Mr Behuria said. If last year’s formula for burden-sharing is applied, no oil company would be able to bear the burden, he said.

He said that the Government might think of a plethora of measures such as raising the prices of petroleum products, reduction in customs duty, enhanced compensation to oil companies and a ‘quota’ for customers for products at subsidised prices.

More Stories on : Outlook | Petroleum

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