If upstream companies do not share losses on petrol, diesel, LPG and kerosene, IOC will post a net loss of Rs 1,800 crore (Rs 18 billion) in the April-June quarter, industry sources said.
BPCL will end up with a loss of Rs 1,300 crore (Rs 13 billion) while HPCL will post a net loss of about Rs 1,050 crore (Rs 10.5 billion).
IBP will see a net loss of Rs 400 crore. "The upstream companies are likely to share at least one-third of the losses on petrol, diesel, LPG and kerosene but even after that the oil retailing firms will post net losses," an official said.
IOC, BPCL, HPCL and IBP lost Rs 4,700 crore (Rs 47 billion) in revenues on selling petrol and diesel below the imported cost and Rs 4,800 crore (Rs 48 billion) on LPG and kerosene in April-June quarter.
"Even if last year's policy of ONGC, GAIL and OIL picking up one-third of the projected revenue loss on LPG and kerosene continued and a similar policy applied for petrol and diesel, the public sector oil firms will still end up in red," officials said.
With petrol being under-priced by Rs 2.25 per litre and diesel sold at Rs 4.69 a litre loss, the retailers lost Rs 4,700 crore (Rs 47 billion) in revenues in April-June. Under-realisation on LPG and kerosene was Rs 4,800 crore (Rs 48 billion).
The official said the situation might be salvaged if Reliance and MRPL are also asked to share the revenue loss.
The newly appointed IOC director (finance) S V Narasimhan said profitability of the Fortune 500 Company in Q1 was largely dependent on the subsidy-sharing scheme the government would evolve.
Last month, the government for the first time, allowed state-owned oil firms to partially align domestic petrol and diesel prices with cost but the three-day freeze on kerosene prices continued.
LPG prices were last changed in August 2004 despite crude prices touching a record $60 a barrel.
The price freeze, despite rising price of oil in the international market on which India is 73 per cent dependant to meet its requirement, has resulted in huge revenue loss to public sector oil companies.
Petroleum Minister Mani Shankar Aiyar had on Monday stated that government control on fuel prices would continue 'indefinitely' and companies should look at raising resources from other sources such as exports.
Though petrol and diesel were freed from state control in April 2002, the Congress-led UPA government put in abeyance the policy of fixing prices every fortnight based on global trends, when it came to power in May, 2004.
The official said though the spike in global oil prices and increased incidence of duties had on June 20 warranted a hike of Rs 4.68 per litre in petrol, the government settled for hike of Rs 2.50 per litre.
Similarly, on diesel the hike announced was only Rs 2 per litre despite the necessity of Rs 5.13 per litre.
"We are making a net loss of Rs 130 on sale of every LPG cylinder and over Rs 11 on every litre of kerosene sold," he said.
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