IndianOil's hydrocracker unit at Haldia on stream
New Delhi   26-Dec-2010

The Oil Ministry on Saturday sought to soothe the frayed nerves of oil marketing companies in view of the huge under-recoveries suffered by them by saying that they need not fear from suffering losses.

“Solutions will be found to the problem, as the Finance Ministry has assured us. They have no reason to fear from suffering losses,” Petroleum Secretary S. Sunderashan told reporters at the inauguration of new hydrocracker unit and expansion of IndianOil's (IOC's) Haldia refinery's capacity by 1.5 million tonnes here.

He said oil companies had been suffering from under-recoveries since 2006-07, ranging from Rs.50,000 crore to Rs.1.50-lakh crore, but none of the oil companies had reported losses so far.

The projected under-recovery for 2010-11 on account of selling diesel, LPG and kerosene is likely to be in the region of Rs.70,000 crore.

To a query, he said that the government had not taken any decision about IOC's follow-on public offer and no time-frame for it.

Mr. Sunderashan said the government had approved ONGC's 5 per cent disinvestment. During 2009-10, domestic refining capacity has been augmented to 185 million tonnes annually. New refineries are under construction at Bina in Madhya Pradesh, Bhatinda in Punjab and Paradeep in Orissa.

After commissioning of these refineries, the refining capacity is expected to reach 238 million tonnes by the end of 2011-12.

Earlier, speaking at the inauguration ceremony, Union Minister of Petroleum and Natural Gas Murli Deora said the Ministry's request to the Finance Minister Pranab Mukherjee, who was present, was to continue with the subsidies provided to oil companies.