Even as international crude oil prices have touched $70 a barrel, the price of Indian basket of crude has rocketed to $66 a barrel.
Oil marketing companies expect under-recovery of Rs 2,000 crore (Rs 20 billion) in the first fortnight of the current year itself.
"Indian Oil, with nearly half the market share, is expected to record nearly Rs 1,000 crore (Rs 10 billion) under-recovery," an official source told Business Standard.
The average for Indian basket price till April 11 was $64.53, much higher than the $60 per barrel recorded in March, according to latest figures.
However, the petroleum ministry has still not been able to take a call on removal of subsidy on cooking gas as recommended by the Rangarajan Committee.
In fact, the committee had suggested a hike of Rs 1.67 per litre for petrol and Rs 2.65 per litre for diesel, without freight equalisation charges. Ministry officials are hoping to move forward on the issue in May, after state elections are over.
With companies continuing to incur losses on account of selling petroleum products below cost prices, experts feel that urgent steps must be taken to address the situation as the price rise is expected to continue.
"There is a trend of unprecedented energy demand growth and at this rate, the prices may continue rising further," RK Pachauri, director general, Teri said.
He added that the government needed to phase out subsidies and increase the prices of petroleum products to prevent oil marketing companies from bleeding further.
Partha Bardhan, executive director of KPMG and energy expert, said India also needed to make more efforts at acquiring gas assets abroad in order to rein in domestic prices.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group