For the first time in seven months, state-run fuel retailers are making losses on selling diesel and together with negative returns on petrol, LPG and kerosene, the companies may lose Rs 38,700 crore (Rs 387 billion) in revenues this year.
Indian Oil, Bharat Petroleum and Hindustan Petroleum raised avitation turbine fuel price by Rs 3,949 to Rs 36,252 per kilolitre in Delhi effective Monday midnight, an IOC official said. International crude oil prices have firmed to a seven-month high of $72 per barrel on hopes of demand revival in US.
With the rising price of crude oil, the gap between the desired selling price and the actual selling price -- referred to as under-recovery -- is up to Rs 190 crore (Rs 1.9 billion) a day. The solution is to raise retail prices, an unpopular move.
The firms were till last month selling diesel at a profit of 32 paise a litre, which helped them partly neutralise the losses on the sale of petrol, domestic LPG and kerosene. But from Monday, IOC, BPCL and HPCL are at breakeven on diesel while they lose Rs 3.68 a litre on petrol, Rs 69.49 per 14.2-kg LPG cylinder and Rs 12.65 on every litre of kerosene, industry sources said.
The Oil and Natural Gas Corporation will pay Rs 852 crore (Rs 8.52 billion) for subsidising petrol and diesel during January-March quarter but state gas utility GAIL India has been spared from the subsidy burden.
In 13 hikes, petrol price has gone up by Rs 7.11 per litre and diesel by Rs 7.67 a litre.
This is the highest any Indian company has been ranked on the Fortune Global 500 list.
With Indian Oil, Hindustan Petroleum and Bharat Petroleum projected to lose Rs 200,000 crore (Rs 2,000 billion) in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs 2 to 5 per litre appears on the cards.
State-run oil companies on Wednesday raised prices of aviation turbine fuel, or ATF, for the third time in a month, this time by about 6.7 per cent, in step with international rates, which are firming up.
Reliance has shut all of its 1,432 petrol pumps in the country after sales dropped to almost nil as it could not match the subsidised price offered by public sector competition. Public sector currently sells petrol at a loss of Rs 13.97 a litre and diesel at a discount of Rs 20.97 per litre. This revenue loss is made up by the Government through issue of oil bonds. Private firms were not entitled for the subsidy and priced fuel from their pumps at Rs 8-10 a litre higher.
Public sector oil firms plan to set up over 4600 petrol stations and 907 LPG sale agencies in the current fiscal, Petroleum Minister Mani Shankar Aiyar said on Thursday.
The Congress Party on Monday strongly opposed the government's decision to divest stake in Hindustan Petroleum Corporation and Bharat Petroleum Corporation saying that hydrocarbon is part and parcel of the strategic sector.
The government on Thursday permitted 100 per cent foreign investment under the automatic route in oil and gas PSUs which have received in-principle approval for strategic divestment. The move would facilitate privatisation of India's second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL). The government is privatising BPCL and selling its entire 52.98 per cent stake in the company.
The government is considering allowing private firms to sell subsidised domestic cooking gas LPG, the Lok Sabha was informed on Thursday.
Indian Oil, Bharat Petroleum and Hindustan Petroleum recorded profit on the sale of petrol and diesel, the first in three years, on the back of falling international oil prices, industry sources said. The three firms are moping up a neat Rs 11.99 per litre margin on petrol and Rs 4.13 a litre on diesel sale.
Oman Oil Company has offered to buy a 26 per cent stake in the upcoming refinery at Bina for $250 million (Rs 1,200 crore), reversing an earlier decision not to increase its stake beyond the 2 per cent it currently owns.
The government will take home Rs 4,022 crore (Rs 40.22 billion) by way of interim dividend bonanza declared by the state-owned oil companies in the last one week.
The government owned oil companies have proposed to pay interim dividend for the financial year 2006-07
Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd have restarted their Mumbai-based refineries, which were partially shut following incessant rains.
With general elections on the horizon, the government's privatisation bandwagon has almost but stalled as a government wary of being accused of selling family silver opts for minority stake sales on stock exchanges over outright privatisation. The result -- the divestment target for current fiscal year is again likely to be missed. Big ticket privatisation plans such as that of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and CONCOR are already on the backburner and analysts feel meaningful privatisation can happen only after April/May general elections.
Last month, Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum were losing Rs 390 crore (Rs 3.9 billion) per day on sale of petrol, diesel, kerosene and domestic LPG. This month, losses have come down to Rs 352 crore (Rs 3.52 billion) per day, an industry official said.
Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have seen revenue losses on sale of petrol, diesel, LPG and kerosene coming down to Rs 450 crore (Rs 4.5 billion) per day from Rs 600 crore (Rs 6 billion) per day, industry sources said. The basket of crude that India buys has averaged $114.37 a barrel this month as against the July average of $132.47 per barrel.
The India story got stronger on the global arena with the country expanding its presence on the elite list of Fortune Global 500 companies, as the PSU banking major State Bank of India has become the sixth domestic firm to feature in the league.
The under-realisation on fuel sales incurred by the oil marketing companies is projected to rise by 14 per cent to around Rs 760 crore (Rs 7.6 billion) per day in the first fortnight of July from Rs 680 crore (Rs 6.8 billion) per day in the second fortnight of June.
Petroleum Minister Ram Naik said the terms and conditions of the strategic sale of HPCL and and public offer in BPCL would be worked out by a core group of secretaries on divestment.
Reliance Industries, the country's largest LPG producer, will be spared from footing the Rs 7,200 crore (Rs 72 billion) bill for the one year freeze in LPG and kerosene prices, despite rising cost.
A decision on sale of government equity in HPCL, BPCL could be delayed beyond the Dec 7 deadline with PetroMin Naik stating he has no idea about the next CCD meet.\n\n\n\n
The Oil and Natural Gas Corp has asked the government to review the scheme of sharing of liquefied petroleum gas and kerosene subsidy with upstream firms and said the scheme should not be extended beyond March 2004.
This is the second hike in diesel price this month.
Supreme Court on Friday issued notices to the Union government and public sector oil majors Hindustan Petroleum Corporation and Bharat Petroleum Corporation on a public interest litigation challenging the Centre's decision to privatise.
