Oil firms reject profit claims
New Delhi   04-Jun-2012

Chief executives of three state-run oil firms on Saturday rejected criticism that they had recorded huge profits and said a bailout package worth Rs 1,38,500 crore had enabled them to declare nominal profits in 2011-12.

A statement issued by the chairman and managing directors' of IndianOil, HPCL and BPCL said a false impression was being created in some sections that the oil marketing companies (OMCs) had recorded huge profits in 2011-12. "On the contrary, the OMCs have been incurring huge losses. The companies incurred losses due to sale of three products, namely diesel, domestic LPG and PDS kerosene, at highly subsidized prices, “the statement said.

"It is only after the assistance of Rs 83,500 crore from the government and Rs 55,000 crore from the upstream oil companies (ONGC, OIL and GAIL), totaling Rs 1,38,500 crore, the three public sector OMCs could declare nominal profits. Had this assistance not been given, the three OMCs would have reported a combined loss of Rs 1, 32,000 crore," the statement added.

The statement from the state-run oil companies comes after Union minister Vayalar Ravi raised doubts about their claims of making losses while raising petrol prices sharply. He had also urged the government for a "bold look" to reduce the recent Rs 7.50 per litre hike.

The CMDs' statement said the three OMCs together had a combined turnover of Rs 8, 33,000 crore during 2011-12. Against this, they had declared a combined profit of Rs 6,177 core. "This level of profit is not adequate for OMCs to enable them to incur huge expenditure on continuous modernization, making available environmentally compliant fuels, laying of pipelines, enhancing storage, and development of other infrastructure," the statement said.