The drop in international oil prices has resulted in revenue loss of Indian Oil, Bharat Petroleum and Hindustan Petroleum dip to Rs 400 crore per day from Rs 450 crore (Rs 4.5 billion) a fortnight back. The basket of crude oil India buys averaged $111.09 a barrel in the second fortnight of August as compared with $117.37 per barrel in the first fortnight of the month.
"Air India is unable to pay even after a 90-day credit period. They owe us about Rs 300 crore without interest. There is also no bank guarantee from Air India to any of the oil marketing companies. We do not know when will the company honour its dues," said a BPCL official on condition of anonymity.
The slowdown in corporate revenue growth over the last one year has begun to reflect in India Inc's capital expenditure, or capex. The country's top listed companies are going slow on fresh investment in capacity expansion, in line with a deceleration in their top line growth. The combined fixed assets of the listed companies, excluding banking, finance services and insurance (BFSI) and the government-owned oil & gas firms, were up 10.1 per cent year-on-year (Y-o-Y) during April-September 2023 (H1FY24) - the slowest in 18 months - as against 21.1 per cent Y-o-Y growth in H2FY23 (October 2022-March 2023) and 11.6 per cent growth in the April-September 2022 period (H1FY23).
Profits of the country's oil marketing companies - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - fell by as much as 29 per cent in 2007-08 in spite of an up to 56 per cent rise in the oil bonds these companies received during the year compared with 2006-07.
Bharat PetroResources, a wholly owned subsidiary of BPCL and Videocon Industries, holds 40 per cent of the block. Brazil's Petrobras holds the remaining 60 per cent.
'He builds confidence in players. He has the knack of motivating people.' 'A few good words from Ravi and that player will be an altogether different player in minutes.'
This is to compensate for their under-recoveries on the sale of petroleum products during the current financial year. Indian Oil Corporation has been issued oil bonds worth Rs 5,817.27 crore, while Bharat Petroleum Corporation has been issued bonds worth Rs 2,144.32 crore. Hindustan Petroleum Corporation has got bonds worth Rs 2,038.41 crore. Prior to this, bonds worth Rs 60,967 crore had already been issued.
A higher government borrowing will 'crowd-out' the private borrowing and push interest rates higher.
Unlike the previous visit, where TDP MPs accompanied Naidu to meetings, sources termed the current visit as "low profile", with one-on-one meetings with key Union ministers.
Vijay Mallya-owned Kingfisher Airlines owes state-run oil companies over Rs 950 crore (Rs 9.50 billion0 in unpaid fuel bills while financial crisis-hit NACIL has cleared almost two-thirds of its outstanding.
Getting compensated for at least 90 per cent of losses without government subsidy appears difficult.
As oil marketing companies (OMCs) stare at huge under-recoveries, India is facing fuel shortage across the country with states like Rajasthan, Madhya Pradesh, Karnataka Uttarakhand, Gujarat and Haryana being the worst hit. The under-recoveries suffered by OMCs are around Rs 20-25 a litre for diesel and Rs 14-18 a litre for petrol, said sources. Government and state-run companies denied reports of any crisis or supply-side issues on the availability of fuel.
Public sector oil marketing company Indian Oil Corporation (IOC) will raise prices of petrol by 27 paise a litre, - for the first time since decontrolling petrol prices.
OMCs losing Rs 20 crore daily on sales, 18 months after prices were deregulated.
In nine hikes, petrol price has gone up by Rs 5 per litre and diesel by Rs 4.87 a litre.
Petrol prices were freed from government control last month, resulting in a Rs 3.50 per litre rate hike in Delhi.
State-run Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently sell petrol, a commodity which the government freed from its control in June last year, at a discount of about Rs 4.50 a litre to its imported cost.
Several members of Parliament have opposed privatisation of public sector oil firms like IOC and have asked the government not to seek a review of the Supreme Court verdict halting privatisation of HPCL and BPCL, Petroleum Minister Ram Naik said.
While Indian Oil Corporation will get the highest Rs 5,817.27 crore (Rs 58.17 billion) of special bonds, Bharat Petroleum Corporation Ltd will receive Rs 2,144.32-crore (Rs 21.44 billion) bonds and Hindustan Petroleum Corporation Ltd will be issued bonds worth Rs 2,038.41 crore (Rs 20.38 billion). The bonds will carry an 8 per cent coupon rate and will mature in 2026, the government said in a statement.
IOC and its sister PSUs, Hindustan Petroleum and Bharat Petroleum, sell diesel, domestic LPG and kerosene at rates way lower than their imported cost to help government keep general price inflation under check.
State-owned fuel retailers, which last week raised petrol price by Rs 1.80 per litre, reported a net loss of over Rs 8,000 crore (Rs 80 billion) in July-September quarter and are borrowing heavily to even buy crude oil.
Kaushik Basu, chief economic advisor in the finance ministry, said, "All I can say is, we are very serious about fiscal consolidation, and intend holding on to our fiscal targets, even if the crude price rises on a sustained basis."
The petroleum ministry has sought additional oil bonds worth about Rs 13,000 crore (Rs 130 billion) to cover the revenue loss on fuel sale in the fourth quarter of the current fiscal.
Over 100 chemical storage tanks built at the Pirpav jetty near Chembur have been operating without approvals from the ministry of environment and forests for over 18 years. Each of these tanks has an average capacity of 200,000 kilolitres of oil.
IOC and other state retailers had on September 16 raised jet fuel price by 2.5 per cent.
The Union oil ministry is considering a proposal to adopt differential pricing for diesel, under which industrial users like power utilities, will be charged market prices and retail consumers continue to be subsidised.
A series of rises in petrol price following its decontrol on June 25 last year has increased the state governments' earnings from value added tax on petrol by around 21 per cent.
Higher crude oil prices have almost doubled the under-recoveries of government-owned oil marketing companies -- Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum -- in the past three years.
The combined debt of Indian Oil, Bharat Petroleum and Hindustan Petroleum has risen to Rs 115,000 crore (Rs 1,150 billion) as they borrowed to make up for revenue losses on fuel sales during the first half of the current fiscal.
The bonds will help oil marketing companies - IOC, HPCl, Bharat Petroleum and IBP Ltd - to cover their under-recoveries.
Despite raising petrol prices by around Rs 2.95 a litre - the second-biggest increase in this calendar year so far - public and private retailers are losing Rs 50 crore a day on selling the auto fuel.
The government on Wednesday said there was no proposal to either merge Hindustan Petroleum and Bharat Petroleum with Oil and Natural Gas Corp or Oil India Ltd with Indian Oil Corporation.
The ministry of petroleum and natural gas is evaluating a threshold at which the subsidy on liquefied petroleum gas (LPG or cooking gas) will be reinstated. According to a senior government official in the know, a survey is currently being conducted to determine the price at which maximum consumers will keep buying domestic cylinders. One of the options also being considered is to limit any subsidy disbursal only to Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries.
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