The fuel price revision on Wednesday is likely to wipe out the Rs 1,100 crore net revenue earned by the three oil marketing companies (OMC) — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — in the last one month, say officials from these companies.

Prior to the price cut, these companies were getting a high retail margin of Rs 8 per litre on petrol and Rs 3 per litre on diesel, which more than offset the under-recoveries on LPG (Rs 32 per cylinder) and kerosene (Rs 14 per litre).

The price of the Indian basket of crude has already crossed $40 per barrel from a low of $35 last month.

Analysts say the price revision could impact the January-March quarter’s margins of these companies, especially if international crude oil prices rise further.

“This price reduction could also spur demand, and if the international crude oil prices also spike, together they could impact the bottom line of the oil marketing companies,” said a Mumbai-based analyst.

However, the oil marketing companies are of the view that oil bonds would save the day for them. “The government has decided to compensate us in full towards the losses we would make on sale of fuel, and this might help us stay in the green,” said a senior IOC official.

To partly compensate OMCs, the government has already approved the issue of oil bonds of Rs 60,967 crore and the upstream oil companies have also contributed Rs 32,000 crore to partially take the subsidy burden of Rs 106,000 crore notched up in the April-December period.

The extent of under or over-recovery the OMCs make on sale of fuel will be ascertained next week when these firms revise prices of petro products. Oil companies revise prices twice a month (on the 1st and 16th of every month) based on the average imported price for the preceding fortnight.

While the Oil & Gas Index was down 0.87 per cent on the Bombay Stock Exchange today, BPCL closed at Rs 389, up 2.76 per cent; HPCL closed at Rs 278.25, up 2.73 per cent and IOC closed at Rs 435.75, up 0.22 per cent.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - Markets off day's low - Dow not responsible for Bhopal: Olympic panel - Unitech to contest Telenor's demand for compensation - Municipal polls: Low voter turnout in Mumbai - Goldman upgrades Hero MotoCorp to 'buy'

Read Business news in  Advertisements -  Now property search gets more exciting than ever before! -  High Growth Business Opportunities in Africa - Register to explore -  Medium-sized businesses are the engines of a smarter planet. -  Save over Rs.3000 with IndianOil Citibank Card -  We live for our family. have you secured them? -  India's No. 1 Property Site. Click here to know more.. -  Diseases earlier, Saving Costs, Extending Lives. Know More.. -  Get 5% cashback on telephone bills with Citi -  Enjoy the journey as much as the destination. click to know more.. -  Exim Bank Conclave on India - Africa Project Partnership. Know more.. -  Be part of it The World's Largest Aircraft. -  Creating Wealth made simple the SIP way. Know more.. -  Only Developer to give a guarantee on time space & rate. -  Office 365 for professionals and small businesses. -  Buy Your Property with Our Triple Guarantee in India. -  Improve Patient Care & Experience. Click here to know more -  Win a Business Class Ticket to Europe..Know more.. -   Introduce a New Automotive Luxury Car.. know more -  Health is Wealth..... Insurance + Savings... Know More...