Oil mktg cos to sell only branded fuel

Indian Oil, Bharat Petroleum and Hindustan Petroleum have converted about 70-80 per cent of their petrol pumps in 17-18 cities including NCR, Mumbai, Kolkata and Bangalore to "branded fuel only outlets," industry sources said.     

Branded petrol costs between Rs 3 and 4 a litre more than normal unbranded petrol, while branded diesel is priced at Rs 1.25 to Rs 2 per litre more than normal diesel.     
Consumers will no longer have the choice of buying the cheaper fuel at most of the petrol pumps in big cities, sources said, adding the move on part of the oil companies was a calibrated effort to completely phase out the normal or unbranded fuel from these cities.

The move appears to be prompted by the whopping Rs 2,00,000 crore revenue loss projected on sale of petrol, diesel, domestic LPG and kerosene.     

Sources said the state-run oil firms have also decided not to issue new domestic LPG connections and fix quota for the existing customers so as to make ends meet within the existing collections.     

IOC, BPCL and HPCL are losing over Rs 550 crore a day on fuel sales.     
Government's bar on oil firms to raise fuel prices despite cost of raw material (crude oil) doubling to over 120 dollars a barrel, is likely to see the three firms end the current year with a revenue loss of Rs 2,00,000 crore. Last year, the revenue loss was Rs 77,304.50 crore.     

Oil companies are borrowing Rs 3,500 crore per month to keep their operations running. Borrowings of the three firms have reached Rs 65,000 crore.     

Stopping issuance of new LPG connections would help limit the Rs 305.90 per cylinder loss. Besides, quota per family would be fixed and expansion of retail network put on hold. Other measures include stopping import of fuels like diesel, for which high international prices have to be paid.     

Though the nation is short in LPG and diesel production this year, the companies have suggested managing demand within the existing production.     

Sources said government's current compensation mechanism was grossly inadequate and the companies were facing problems even in meeting their day-to-day expenses.      Government makes up for 42.7 per cent of the under realisation on fuel sales by issue of oil bonds, while 33 per cent is chipped in by companies like ONGC and GAIL.      The oil firms were, at present, losing Rs 16.34 a litre on petrol, Rs 23.49 per litre on diesel, Rs 305.90 per LPG cylinder and Rs 28.72 a litre on kerosene.