With crude oil touching a record $72 per barrel, Indian Oil Corporation is seeking a Rs 5.6 per litre increase in petrol and Rs 7.6 a litre hike in diesel prices to offset the Rs 80-crore (Rs 800-million) revenue loss per day it was suffering on selling fuel below production cost.
"(If crude prices stay at current levels), our revenue loss for the 2006-07 fiscal would be around Rs 30,000 crore (Rs 300 billion)," IOC chairman S Behuria told reporters in New Delhi.
The company was selling petrol at Rs 5.67 per litre lower than the imported cost while diesel was being sold at Rs 7.60 a litre discount to the imported cost. Kerosene was being sold at a loss of Rs 13 per litre and the company was losing Rs 191 on sale of every cylinder of domestic cooking gas.
Behuria said IOC, which controls roughly half of the Indian fuel market, was losing Rs 80 per day on selling petrol, diesel, LPG and kerosene below the production cost.
"In April alone, our revenue loss is estimated at Rs 2,500 crore (Rs 25 billion)," he said.
Sources said the under-realisation in revenue by state-run oil marketing companies -- IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp -- for selling petrol and diesel below their production cost was Rs 883 crores in the first fortnight of April. This was over and above the Rs 14,756 crore (Rs 147.56 billion) shortfall faced by the OMCs in April 2005-March 2006.
Petroleum Minister Murli Deora is likely to meet Finance Minister P Chidambaram next week to discuss a package of tax measures to help loss-making oil refiners.
IOC, BPCL, HPCL and IBP together posted a net loss of Rs 9,700 crore (Rs 97 billion) in the first three quarters of the fiscal year to March 2006 because the government did not raise fuel prices in step with soaring crude prices.
The new package is likely to be based on the recommendations of the Rangarajan Committee to slash duties on petroleum products and raise retail prices to lower losses.
Sources said a decision on raising fuel prices was not likely before mid-May, when elections to Tamil Nadu, Assam, Kerala, West Bengal and Pondicherry are completed.
Oil firms are clamouring for lower taxes and higher retail prices as global oil prices have soared, but domestic fuel prices have been frozen since September, when the administered price of petrol and diesel was raised 7 per cent.
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