OMCs may see loss of Rs 65,000 crore in FY11

Public sector oil marketing companies (OMCs) – Indian Oil, Hindustan Petroleum and Bharat Petroleum – are expected to incur a revenue loss of Rs 65,000 crore in the current financial year — up over 22 per cent from the earlier estimate of Rs 53,000 crore.

“Oil prices in the international market are again on the rise. Currently, oil marketing companies are incurring under recovery (revenue loss) of Rs 4.11 per litre on diesel, Rs 16.88 per litre on kerosene and Rs 272 per cylinder on domestic LPG sale,” petroleum minister Murli Deora informed the Consultative Committee of Members of Parliament today.

November average for the Indian basket of crude oil is $84.20 per barrel. The current fiscal average price has been $77.97 per barrel — up 11.76 per cent from 2009-10 average. The country meets over 80 per cent of its crude oil requirement from imports.

Deora said the government will continue to closely monitor prices of these sensitive petroleum products and will implement a suitable compensation mechanism for oil companies. The OMCs are required to sell diesel, kerosene and LPG at government-capped prices, resulting in losses. These losses are usually compensated by the government through a mix of cash and discounts from upstream companies like ONGC and Oil India Ltd.