New Delhi, Aug. 22: Haemorrhaging from the crude price spiral, public sector oil companies are expecting an early green signal from the government on price hike.
Sources said a meeting on prices is likely on September 1, but the hike needs the approval of Prime Minister Manmohan Singh.
Though Singh had said on Independence Day that prices must follow the market, political exigencies are a crucial hurdle to such an approach.
A senior Indian Oil official told The Telegraph that the PSUs are losing Rs 6 per litre on petrol, Rs 7 on diesel, Rs 18 on kerosene and Rs 120-130 per cylinder on cooking gas.
However, petroleum ministry officials feel only a modest increase in prices is possible and the rest of the losses will have to be borne through government bonds, subsidies by upstream PSUs, ONGC and OIL, and possibly some reduction in duties. The petroleum ministry will be offering a mix of these options for the consideration of the finance ministry.
When the prices of petrol and diesel were increased in June, international prices for the Indian basket of crude imports were at $55 per barrel.
Crude prices have been rising relentlessly since then and the Indian basket is now over $72 per barrel. Since crude makes up over 90 per cent of the cost of petroleum products, the options with oil companies are limited once international prices shoot up. India meets 75 per cent of its crude through imports.
Only ONGC and OIL as upstream oil companies gain when prices soar. The government leverages this surplus to compensate the PSUs — Indian Oil, Bharat Petroleum, Hindustan Petroleum and IBP.
While the tab of ONGC has been fixed at Rs 24,000 crore this fiscal, this may be increased as crude prices have risen further since then.
The government’s contribution of Rs 28,000 crore as oil bonds will also have to be raised as the benchmark price for fixing this share has increased.
IOC chairman Sarthak Behuria said, “The financial situation of the company is horrendous as it is losing around Rs 100 crore per day on the sale of LPG, kerosene, petrol, and diesel. The government will have to do something.”
IOC has suffered an operating loss of Rs 1,444 crore in the first quarter though its net profit was Rs 1,781 crore on the back of Rs 3,225 crore earned from the sale of its shares of ONGC.
Behuria, however, said this was a one-time fix and would not bail out the company for the rest of the fiscal.
Hindustan Petroleum and Bharat Petroleum, without any extraordinary income, piled up losses of over Rs 600 crore each in the first quarter.
Oil India Ltd (OIL) has posted a net profit of Rs 1,689.93 crore in 2005-06 compared with Rs 1,061.68 crore in 2004-05.
The company has recorded a total income of Rs 6,036.56 crore, which is 46 per cent higher than last year.
The increase in total income and net profit was triggered by to higher sales volumes of crude and natural gas and an increase in crude prices.
The company has decided to pay a final dividend of 80 per cent, taking the total dividend paid to 265 per cent for the year compared with 160 per cent in the previous year.
Crude oil sales during the year touched 3.16 million tonnes and gas sales were 1.74 billion cubic metres.