OMCs' Q2 losses on fuel sales pegged at Rs 21,370 cr

State-owned fuel retailers lost Rs 21,374 crore in the second quarter on selling diesel, domestic LPG and kerosene at government-controlled rates that are way below the cost of production.

Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp lost Rs 64,900 crore on selling the three fuels below cost during the April-September period, an official statement said here.

Of this, Rs 43,526 crore pertains to the first quarter ending June 30 and the remaining Rs 21,374 crore is for the July-September quarter.

The three firms are losing Rs 7.06 per litre on diesel, Rs 25.90 per litre on kerosene sold through the public distribution system (PDS) and Rs 270.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.

"The oil marketing companies are currently incurring a daily under-recovery (revenue loss) of about Rs 272 crore on sales of diesel, PDS kerosene and domestic LPG," the statement said.

In Q1, upstream oil firms like Oil and Natural Gas Corp (ONGC) bore roughly one-third of the Rs 43,526 crore under-recovery or revenue loss on fuel sales. The government agreed to give about Rs 15,000 crore as a fuel subsidy and the rest was absorbed by the retailers.

Of the Rs 14,508.83 crore provided by upstream firms, ONGC gave Rs 12,046.26 crore, Oil India Rs 1,780.65 crore and GAIL India Rs 681.92 crore.

No subsidy sharing mechanism has yet been decided for Q2.

The statement said fuel retailers lost Rs 37,719 crore on selling diesel in the April-September period, Rs 13,361 crore on PDS kerosene and Rs 13,820 crore on domestic LPG.

The cost of the basket of crude oil that India buys averaged $108.90 per barrel in the second half of October, as against an average $103.63 a barrel in the first fortnight.

The rupee, however, strengthened against the US dollar, to Rs 49.07 to a dollar in the second half of October from Rs 49.16 in the first fortnight.

The fall in the value of the rupee against the dollar increases the cost of imported crude oil. India is dependent on imports to meet 79% of its oil needs.