RIL had sought Rs 400 crore for the sale of LPG, kerosene

The discussions come in the wake of RIL seeking around Rs 400 crore from the marketing companies in connection with the sale of these two products.

RIL has signed product offtake agreements with Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation to sell petroleum products at import parity prices. This agreement is valid till March 2004.

Confirming that the oil PSUs have not been paying up dues, P M Prasad, president, oil and gas division, RIL, said, “The issue is a very temporary one as the oil PSUs are facing cashflow problems.”

However, he claimed that the company had already recovered part of the dues from oil marketing PSUs. Prasad disclosed this at a press briefing to announce RIL’s yearly results.

A senior official at an oil PSU told Business Standard, “It is not the case with only RIL. We are holding talks with ONGC and GAIL as well to work out a formula to share the losses/burden on account of subsidies on LPG and kerosene. The oil PSUs are also reeling under pressure on account of their inability to pass on the hike in crude prices to consumers.”

He asked, “Why should oil marketing companies take a hit on prices while refining companies go scot free?”

The oil marketing companies have frozen the refinery transfer price on LPG since last November when the price of the cooking gas was $300 a tonne, while kerosene prices were capped at January prices. LPG prices have since steadily moved up to $ 320 a tonne and were quoted recently as high as $350 a tonne.

Besides LPG and kerosene, the oil marketing companies have also done “under-recovery” on prices of transportation fuels such as diesel and petrol.

“There is an under-recovery of almost over Rs 1,000 crore on account of fuel prices to customers not being revised,” the oil company official claimed.