Behuria: At a loss

Mumbai, Aug. 22: Indian Oil Corporation (IOC) is likely to end this financial year with a hit of Rs 20,000 crore, chairman S. Behuria said today.

The company is heading towards a Rs 400-crore cash loss this month because the government has not raised fuel prices.

Behuria, who wants the petrol and diesel prices to go up by Rs 2-3 per litre, said even if upstream oil companies were to bear part of the losses, the company would take a hit of Rs 14,000 crore at the end of the financial year.

Behuria’s warning comes after the company suffered a net loss of Rs 54.2 crore in the first quarter of the current year ended June 30. Other oil marketing companies were also in the red. The Left has resisted moves to raise prices of petrol and diesel.

In July, the government’s decision not to hike fuel prices resulted in IOC suffering a cash loss of Rs 400 crore. Estimates for this month are similar. The company’s subsidiary, IBP, suffered a cash loss of Rs 187 crore in July.

“We are fighting with our backs to the wall,” said Behuria, who was in the city to launch IOC’s new range of Servo marine engine oils.

Apart from a modest increase in petro product prices, oil companies also want the government to compensate them for the hit they took by issuing bonds.

The oil companies are also struggling because the prices of other products such as LPG and kerosene have not been revised too, he added.

“Kerosene is being sold at Rs 9 per litre. It is cheaper than even a Bisleri bottle of mineral water. For LPG too, the prices should go up by some extent,” he added. IOC has recommended to the government that LPG prices be revised upwards by Rs 20 per cylinder.

IOC has chalked out a capital expenditure programme of Rs 7,500 crore that will go into its ongoing diversification programme and expansion of its refinery capacity. Behuria added that for pursuing its other ambitious plans, the corporation should generate net profit up to Rs 9,000 crore on a sustained basis.

Behuria said IOC expects its revenue to grow to $60 billion by 2011 from $35 billion at present. The corporation is planning to integrate vertically into exploration and production on the upstream end and diversify into petrochemicals on the other end in its bid to emerge as integrated, diversified and transnational energy major.