IOC losing Rs 189 cr a day on under-recoveries

State-owned Indian Oil Corporation (IOC) today said it is losing Rs 189 crore per day on selling auto and cooking fuel below cost as global crude oil prices shot up to $102 per barrel.

"The spike in global prices has widened the gap between the retail selling price and their cost," an IOC official said.

IOC, and its sister public sector retailers Hindustan Petroleum Corporation and Bharat Petroleum Corporation, are losing a whooping Rs 9.23 per litre on diesel, the highest ever.

Besides diesel, the three firms are losing Rs 21.60 per litre of kerosene and Rs 356.07 per 14.2-kg on LPG cylinder.

"The industry as a whole is losing about Rs 345 crore per day," he said.

Unrest in Egypt fuelled Brent crude price to an intraday high of $102.08 per barrel yesterday, its highest level since late September 2008 after the Lehman Brothers bankruptcy sent financial markets into a tailspin.

World oil prices are on the spike on fears the escalating turmoil in Egypt will disrupt supply flows through the strategic Suez Canal.

For the full 2010-11 fiscal, the three are projected to lose Rs 75,507 crore in revenues at current prices, the official said adding IOC alone is projected to lose Rs 41,669 crore in revenues.

The official said IOC was losing Rs 101 crore per day on diesel sales, Rs 41 crore on kerosene and Rs 47 crore a day on LPG sales.

In addition, they suffer a loss of about Rs 2.50 per litre on petrol sales, even though prices were freed from government control in June last year.

If prices are not hiked, the government will have to come up with other ways to compensate the oil marketing companies for their losses.

The Oil Ministry wants the Finance Ministry to compensate the oil companies in cash for at least half of their under-recoveries by making adequate provisions in the Budget.

Upstream oil firms like Oil and Natural Gas Corporation (ONGC) will shoulder one-third of the burden.

For the first nine months, the Finance Ministry has approved the release of a cash compensation of Rs 21,000 crore to the three state-run fuel retailers.