PSU OMCs in demand

Shares of three public sector oil marketing companies rose by 0.51% to 1.3% at 12:10 IST on BSE after the under-recovery on High Speed Diesel, PDS Kerosene and Domestic LPG declined.

BPCL (up 1.3%), HPCL (up 0.73%) and Indian Oil Corporation (up 0.51%), edged higher.

The S&P BSE Sensex was up 46.01 points, or 0.20% at 22,492.45.

The under-recovery on High Speed Diesel (HSD) applicable for the first fortnight of April effective 1 April 2014 fell to Rs 5.93 per litre from Rs 7.16 per litre during 2nd fortnight of March 2014 from 16 March 2014. In the case of PDS Kerosene, the under-recovery for April 2014 declined to Rs 34.43 per litre, from Rs 36.34 per litre in March 2014. The under-recovery on LPG declined to Rs 506.06 per cylinder, from Rs 605.80 per cylinder in March 2014. The under-recovery on HSD is calculated on fortnightly basis whereas the under-recovery on PDS Kerosene and LPG is calculated on monthly basis.

Public sector oil marketing companies (PSU OMCs) are currently incurring combined daily under-recovery of about Rs 342 crore on the sale of Diesel, PDS Kerosene and Domestic LPG at government controlled prices.

Meanwhile, lower crude oil prices and higher rupee also aided gains in shares PSU OMCs.

Brent crude oil futures settled $2.14 lower on Tuesday at $105.62 per barrel, its lowest settlement since 8 November 2013 as data showing a slowdown in Chinese manufacturing fed concerns over the outlook for energy demand. Lower crude oil prices will help reduce under-recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at government controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals. The government has already freed pricing of petrol.

The strength in rupee against the dollar has also eased concerns of higher cost of crude oil imports. The partially convertible rupee was hovering at 59.63, compared with its close of 59.91/92 on Friday, 28 March 2014. Trading in the rupee resumed after a two-day break due to a local holiday and annual closing of bank accounts. Public sector oil marketing companies (PSU OMCs) import about 70-75% of their crude oil needs.

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