The Telegraph
Since 1st March, 1999
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IOC seeks steep hike in prices

Calcutta, April 29: Indian Oil Corporation (IOC) wants a Rs 10-a-litre rise in petrol and diesel prices.

Chairman Sarthak Behuria said oil marketing companies, including IOC, were losing a similar amount on every litre by selling the fuels at a lower rate.

Oil marketing companies have lost Rs 4,700 crore in April alone when crude oil prices touched an all-time high of $75 a barrel over worries in West Asia.

Behuria hopes that the government will announce some relief measure by the middle of May.

The government has refrained from tinkering with domestic oil prices because of the Assembly elections in five states.

However, it is certain that the price rise will be moderate though oil marketing companies are pitching for a good hike.

While petrol and diesel continue to worry oil companies, losses on account of cooking gas and kerosene are mounting too. In cooking gas, under-recovery was Rs 130 per cylinder, while that for kerosene was Rs 14 per litre.

When asked if he could reasonably hope for a price hike, Behuria said: “IOC is a commercial organisation. It should be paid for what it sells.”

IOC is putting up a brave front by saying that under-recoveries are not putting a strain on its balance sheet and ongoing capital expenditure plans. However, it has been forced to resort to stop-gap arrangements to mobilise funds.

For instance, it partly offloaded its holding in ONGC last week, raising Rs 3,673 crore to tide over a financial crunch.

“There is no problem (with finances) for the next three months. We hope the government will do something before that,” Behuria added.

The government might tweak the duty structure, factor in the suggestions of the Rangarajan Committee report, make ONGC pay more cess to give maximum relief to companies, while not hurting the consumers.

IOC has earmarked an investment of Rs 7,500 crore for this fiscal. A bulk of the money will be spent on the Panipat refinery and petrochemical hub.

Behuria hoped that the oil major would be able to maintain its profitability during 2005-06. The falling marketing margins had been offset by refining margins.

Besides, IOC would also get a cash flow following the sale of bonds worth Rs 6,300 crore offered to it by the government. However, its subsidiary IBP will definitely end up in loss in 2005-06.

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