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Retailers Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are likely to see about Rs. 45,000 crore of revenue loss on selling diesel, domestic LPG and kerosene at government controlled rates in the April-June quarter.
“As per practise, at least one-third of these losses will have to be borne by upstream firms. So, ONGC, Oil India Ltd and GAIL India will together take a hit of about Rs. 15,000 crore. Of this Rs. 15,000 crore, ONGC’s share is the biggest at around 82 per cent,” an industry official said.
As per this formula, ONGC will have to shell out Rs. 12,300 crore in fuel subsidy in the April-June quarter. But if the formula used in the January-March quarter, when upstream firms were made to bear 38.5 per cent of the total revenue loss, is applied, the share of ONGC will rise to a whopping Rs. 14,206 crore.
Upstream firms, as per this formulation, would have to pay Rs. 17,325 crore in fuel subsidy.
The official said ONGC had in January-March quarter given discounts on crude oil it sells to refiners totalling Rs. 12,136 crore, the highest ever subsidy payout.
The three fuel retailers are losing about Rs. 460 crore per day on selling diesel, domestic LPG and kerosene below cost.
An Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee, which decides on revising rates of the sensitive products, has not met since June last year even though crude oil prices have spiralled upward by about 50 per cent.
State-owned oil firms had last month hiked petrol prices by a steep Rs. 5 per litre and are looking at another small increase next week.
Petrol prices were freed from government control in June last year and IOC, BPCL and HPCL have the freedom to fix retail rates but retail prices are sill Rs. 1.98 per litre short of their imported cost, the official said.
Oil firms are losing Rs. 15.44 on the sale of every litre of diesel at the current price of Rs. 37.75 per litre in Delhi.
In addition, state oil firms lose Rs. 27.47 per litre of kerosene and Rs. 381.14 per 14.2-kg domestic LPG cylinder.
The three firms may end the fiscal with a revenue loss of Rs. 166,712 crore, at least half of which will have to be met by the government from its Budget.
The rates for the three products were last hiked in June 2010, when crude was ruling at $ 72 per barrel. The basket of crude oil India buys averaged $ 110 a barrel this month.
