Loss-laden IOC in no hurry to cut petrol price
Kolkata   11-Aug-2011

State-owned IndianOil, which suffered a net loss of Rs 3,719 crore in the first quarter of this fiscal for selling diesel and LPG below cost, today indicated that it would not reduce petrol prices as global crude rates were volatile.

“We are suffering a loss of 81 paise per litre on petrol and if the global prices fall further, first we would like to square off the losses before cutting the prices,” IOC chairman R.S. Butola said.

Global crude prices, which fell after the downgrade of US credit rating, soared again today. Brent crude bounced back to $106 a barrel after it touched a six-month low of below $99 a barrel amid fears of a global slowdown in demand for energy after the US rating rap.

“We cannot take a call on the one-day movement or only crude prices. We will also have to consider the rupee value and the average movement in a fortnight,” Butola said.

Oil ministry officials said the declining trend in global crude prices “should be significant and stable to warrant a cut”.

IndianOil is losing Rs 6.82 on a litre of diesel, Rs 24.93 on a litre of kerosene and Rs 247 per domestic LPG cylinder. It is suffering a revenue loss of Rs 143 crore per day for selling fuel at government regulated prices.

The nation’s largest oil firm had reported a net loss of Rs 3,388 crore in the April-June quarter of 2010-11.

The IOC head said the main reason for the first-quarter losses was a “higher under-realisation on diesel, domestic LPG and kerosene”.

In the first quarter of the current fiscal, the company lost Rs 23,806 crore on selling diesel, domestic LPG and kerosene at subsidised rates. Against this, it got Rs 7,932 crore from upstream firms and Rs 8,201 crore from the government. The portion of the loss not compensated increased to Rs 7,673 crore from Rs 7,343 crore in the same period a year ago, Butola said.

Also, the company had to pay Rs 467 crore more on account of higher interest on its borrowings. The firm had an inventory loss of Rs 900 crore. The company had the crude inventory when the government, on June 26, cut customs or import duty to zero from 5 per cent, leading to the loss in revaluation, he said.

FPO deferred

IOC’s follow-on public offer has been deferred till the end of the year because of unfavourable market condition and volatile crude prices.