N. G. Kannan in Calcutta on Saturday. A Telegraph picture

Calcutta, Aug. 14: IBP is having a tough time sourcing fuel from refineries at the prevailing high prices. The petroleum marketing company has approached the government for more compensation to make up for its losses.

IBP is the only standalone marketing company having no refinery. The company, which posted a profit of over Rs 214 crore last year, may end up in losses this year if a separate pricing formula is not worked out.

The company has suffered a loss of Rs 8.65 crore in the first quarter of 2004-05; loss on account of subsidy was around Rs 67 crore, IBP managing director N. G. Kannan said.

Kannan said all oil companies bear subsidy loss, but in case of IBP, even petrol and diesel sales are at a loss.

“In fact, the more we sale, the more we lose now,” he added.

IBP has urged the government to compensate it for the losses, failing which it would go deeper into the red as crude prices are on the rise. The company, however, is expecting a turnover of Rs 12,000 crore in the current fiscal compared with Rs 10,667 crore in 2003-04.

Once IBP is merged with Indian Oil, it may be able to neutralise its losses to some extent, Kannan said.

The merger issue is very much on the agenda and the government’s approval has already been obtained.

“Now various important things are being worked out and I think by December the merger process should be completed,” he said.

While HSBC will advise IBP on the merger, Morgan Stanley has been appointed by the IOC. Deloitte has been engaged as valuation adviser for both the companies.

Kannan was in the city to launch its Kisan Sabha programme for welfare in rural areas.