Public sector oil companies Indian Oil Ltd, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are headed for deep crisis as the revenue loss on diesel sales
has soared to an unprecedented Rs 19.26 a litre.
The government has not allowed the oil companies to hike the prices of diesel, LPG and kerosene due to political reasons since June last year although the cost of production has shot up by 28 per cent.
The international prices of the Indian basket of crude have skyrocketed to $112, and since over 75 per cent of the country's requirement is met through imports, there is nothing that the oil companies can do to cut costs.
According to official figures, the three oil companies are currently losing around Rs 560 crore per day
on diesel, LPG and kerosene sales as the prices of these products are below the cost of production.
Apart from diesel, these companies are also losing Rs 34.34 per litre on kerosene and Rs 347 per on each LPG cylinder sold to households.
In addition, they lose about Rs 4.85 a litre on petrol sales, which are largely market determined.
It has been estimated that if the present price trend continues
, the three oil marketing companies will end up losing Rs 1,92,951 crore in revenue during the current financial year ending March 31, 2013.
The fact that the government delays the reimbursement of its share of the subsidy to the oil companies further strains their finances as they have to take recourse to borrowing from banks at high rates of interest.
IOL, BPCL and HPCL are likely post net losses even in the second quarter as the supplementary demand for grants has not been cleared due to the deadlock over the coal block allocation.With inputs from PTI