The government is not considering a cut in fuel prices as PSU companies continue to make losses on sale of LPG and kerosene.
"At the moment there is no proposal before us for reducing prices," petroleum secretary R S Pandey told reporters in New Delhi.
State-run oil retailers have started making profits on sale of petrol and diesel, but continue to incur hefty losses on domestic LPG and kerosene.
With international crude oil prices sliding further on falling demand as major economies slow down, the three firms are making a net 70 paise per litre profit on sales of diesel while they earn Rs 9.86 per litre extra on selling petrol above the imported cost.
Based on the average international oil prices in the first fortnight of November, the state-run firms are earning a margin of Rs 16 crore per day on petrol and Rs 5 crore (Rs 50 million) a day on diesel.
However, they continue to lose on kerosene sold through ration shops and domestic LPG. Kerosene is being sold at a loss of Rs 22.40 a litre and LPG at Rs 343.49 per cylinder.
The fall in international oil prices will result in lower revenue loss on fuel sales this fiscal. IOC, BPCL and HPCL will end the 2008-09 fiscal with Rs 122,710 crore (Rs 1227.1 billion) revenue loss, Rs 92,853 crore (Rs 928.53 billion) of which has already been accounted for in
the first half of the fiscal.
The official said, oil companies wanted to use gains on sales of petrol and diesel to make good part of the loss on kerosene and LPG sales, "reducing petrol and diesel prices now will wipe away this golden opportunity."
Current profit on petrol and diesel will not be enough to wipe out the net losses the three firms reported in the second quarter ended September 30, 2008.
IOC posted its largest ever net loss of Rs 7,047.13 crore (Rs 70.47 billion) in the July-September quarter. BPCL posted a net loss of Rs 2,625.17 crore (Rs 26.25 billion) in the second quarter on top of Rs 1,066.70 crore (Rs 10.66 billion) in April-June, while HPCL reported Rs 888.12 crore (Rs 8.88 billion) loss in Q1 and another Rs 3,218.92 crore (Rs 32.18 billion) in Q2.
The state-run firms want the government to increase the quantum of oil bonds they get as part compensation for selling fuel below cost.
The government compensates the three refiners for half of their revenue loss on fuel sales by way of oil bonds. Another one-third of the losses are met by companies like ONGC and OIL by way of discounts on crude oil they sell to them.
However, this compensation was proving to be grossly inadequate, the official said, pointing to the net losses posted by the companies in the July-September quarter.
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