India's biggest refiner-marketer IndianOil has sold government bonds worth Rs 2,464 crore at a discount of 12% and has seen its borrowings go up about 28% to Rs 54,000 crore in the seven months since June as it struggles to keep refinery fires burning in the face of mounting losses on fuel sales.
On Tuesday, company chairman B M Bansal warned that IndianOil will report net loss in the third quarter ending December 31 unless the government compensates it for selling diesel and kitchen fuels at government-capped prices even though crude has risen to $92/barrel level.
IOC had posted a net loss of Rs 7,047 crore for the second quarter of 2008-09. This was the second time it had been in the red after the fourth quarter of 2007-08.
Senior company executives said IndianOil had to borrow more from the market to meet its operational expenses such as buying crude. ''From nearly Rs 40,000 crore on June 26, our borrowings now stand at Rs 54,000 crore. We also lose more to service (pay interest) these borrowings," one executive said requesting anonymity.
He said the company also had to sell oil bonds worth Rs 2,464 crore since April. "We are now left with some Rs 16,000 crore worth of these interest-bearing bonds. We had to sell at 12% discount... we need them very badly,'' the executive said.
Bansal said even after raising petrol prices on Saturday by Rs 2.50 a litre, or 4.5%, the company was still losing Rs 1.22 on each litre of the fuel that does not enjoy any subsidy. "We did not pass on the full burden of rising international crude prices that have reached $92/barrel," he said.
The company has lost about Rs 8,500 crore on selling diesel, cooking gas and kerosene. The company is losing Rs 6.80 on each litre of diesel, Rs 366 on each cooking gas refill and Rs 18.66 on a litre of kerosene each day.