IndianOil hints at slashing petrol price
New Delhi 29-May-2012
IndianOil chairman R.S. Butola hinted on Monday that the company may cut the price of petrol by Rs.1.25-Rs.1.50 per litre from June 1 as international market prices during the current fortnight have softened. "We will certainly pass on any decline in international oil price to consumers," he told journalists.
The public sector oil firms revise petrol prices on 1st and 16th of every month on the basis of the average global price and foreign exchange rate in the previous fortnight.
Gasoline price, against which petrol price has been benchmarked, has come down from $ 124 per barrel, which was taken into account for the hike implemented from May 24, to $ 116-$ 117 a barrel. But the rupee has depreciated further against the dollar- from Rs.53.17 to a dollar to Rs.55.30.
"If there is a downtrend, we would definitely like to pass on the benefit to the consumers." However, the company would like to follow the policy of fortnightly revision of petrol prices from hereon," he added.
Every dollar reduction in international oil price translates into a cut in product price by 33 paise. But every time the rupee depreciates against the dollar by rupee one, it translates into a requirement to raise prices by 77 paise, Butola explained. "We will pass on the benefit as we had done on November 16 and December 1 after the November 4 petrol price hike," he added.
The oil companies had on November 4 raised petrol price by Rs.1.80 per litre but followed it up with two successive cuts in rates - Rs.2.22 a litre on November 16 and Rs.0.78 per litre on December 1.
Butola sai IndianOil has got Rs.45, 486 crore as compensation from the government for selling diesel, LPG and kerosene at subsidised prices. In addition, upstream oil firms ONGC and OIL granted a discount of Rs.29,961 crore on domestic crude oil sold to IndianOil.
This has enabled the company to close the financial year 2011- 12 with a net profit of Rs.3, 955 crore compared with a net profit of Rs.7, 445 crore in the previous year.
As much as Rs.20,800 crore of the government's compensation came in the last quarter, which inflated the net profit for the January- March quarter to Rs.12,760 crore compared with the corresponding figure of Rs.3,905 crore in the same period last year.
Butola said the firm had been drained of Rs.2, 918 crore as higher interest cost on loans due to the delayed payments from the government. IndianOil also had to make a provisioning of Rs.8,157 crore due for the UP government's entry tax on crude oil.
IndianOil had lost Rs.75, 469 crore on selling diesel, domestic LPG and kerosene at government controlled rates in 2011-12. Of this, ONGC gave Rs.29, 961 crore.
After the government subsidy of Rs.45, 486 crore, the company had to absorb just Rs.22.37 crore loss on the three fuel.
The company, as also Bharat Petroleum and Hindustan Petroleum, sells these fuels at government controlled rates to keep inflation under check.
"Besides the under recovery (revenue loss) on diesel, LPG and kerosene, we also lost Rs.2, 236 crore on petrol. This loss is not made by the government because the product is deregulated," Butola explained.
IndianOil's borrowings have risen to about Rs.88, 000 crore from Rs.52,734 crore as on March 31, 2011, he said.
