IndianOil reels under daily losses of Rs 148 crore
Kolkata   29-Dec-2007
IndianOil is suffering daily losses of Rs 148 crore on account of under recovery from its main product lines petrol diesel LPG and kerosene. The country's largest oil marketing company has said it may have to review its capital expenditure plan, in case the government dithers on price revision. "A price revision is the need of the hour. The matter has been referred to a group of ministers (GoM). Rising crude oil prices is a global phenomenon. The government will have to address the issue," said IndianOil chairman Sarthak Behuria. He was in the city to chair the company's first-ever board meeting in Kolkata. "IndianOil's current under recovery amounts to Rs 6.50/litre in petrol, Rs 7.74/Iitre in diesel and Rs 20.40 per litre in kerosene. In case of LPG {cooking gas) it is Rs 253.29/cylin-der," IndianOil director (marketing) GC Daga said. Consequently, the retail sale price revision would have to be Rs 8.19/litre in petrol Rs 9.24/litre in diesel Rs 21.2 I/litre in kerosene and Rs 262.37 per LPG cylinder. A combination of measures is likely to be recommended by the GoM to address the situation. Apart from price hike, it would include import duty cuts, a tweaking of subsidies. Crude prices hovering around $98 per barrel have put oil marketing companies like IndianOil, in a tight spot. "We cannot sustain this situation for long," Mr Behuria commented. "However, the company has not slipped into red because its losses are being offset by profits in lubricants business, through refining margins, pipelines, sale of aviation turbine fuel (ATF), bitumen, naptha and through its overseas operations," he added. If the price revision is delayed, the company will have a relook at its capex plan for the coming years. "For the coming year, 2008-09, IndianOil has earmarked Rs 8,000-crore investment plan on refineries, petrochemicals and to put up a naptha cracker unit. Expenditure on new blocks will not be high since most of them are in exploratory phase. IndianOil has also set a $ I-billion budget for acquisitions," IndianOil director (planning and business development) indicated BM Bansal. IBP which was recently merged into IndianOil has around 10% share of IndianOil's marketing business. Thus, lap's share in total under recovery is likely to be a similar proportion of roughly around Rs 14-15 crore.