IOC seeks compensation for petrol sale loss

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IOC seeks compensation for petrol sale loss

Government run Indian Oil Corp has asked the government to compensate for revenue losses incurred on selling gasoline below market prices, its chairman RS Butola said on Monday.

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Government run Indian Oil Corp , the country's largest oil refining and marketing firm, has asked the government to compensate for revenue losses incurred on selling gasoline below market prices, its chairman RS Butola said on Monday.

India freed pricing of petrol in June 2010 but continues to subsidise prices of gasoil, kerosene and cooking gas to protect the poor from the impact of any inflation pressures.

In the second half of 2011 oil companies began reflecting market realities in local gasoline prices but that stopped since end-November on the advise of the government -- majority shareholders in state fuel retailers, due to elections in some states.

IOC has suffered revenue losses of about Rs 1,560 crore so far this fiscal by selling petrol below market price, its head of finance PK Goyal said.

Butola said state-fuel retailers are currently losing slightly more than Rs 3 per litre on local sale of gasoline.

Oil marketing companies previously cut gasoline prices in mid-November when spot Singapore gasoline prices were about 109.30 a barrel and the exchange rate was about Rs 49.30 to a dollar.

Singapore gasoline prices have since risen to about USD 130 a barrel and the rupee has recovered to about 49.19 to a dollar.

IOC on Monday posted a net profit in October-December as cash subsidy from the government and discount on crude and product purchases from the upstream companies helped it to wipe off revenue losses on fuel sales at subsidised rates.

In the December quarter the company suffered a gross revenue loss of about 176.9 billion on sale of diesel, kerosene and cooking gas, Butola said.

State-run upstream firms gave a discount of Rs 8,336 crore on crude sales to IOC and the federal finance ministry has agreed to pay a cash subsidy of Rs 8,187 crore, leaving the fuel retailer to absorb about Rs 1200 crore.

The subsidy also helped it offset a provision of Rs 6168 crore it had to make to cover levies it could be required to pay on crude oil purchased for its Mathura refinery in northern state of Uttar Pradesh.

IOC had debt of Rs 78696 crore at December-end, Goyal said.

He said IOC has scrapped a Rs 14700 crore term loan agreement it signed with a group of banks led by State Bank of India in 2009 as the floating interest cost of the loan was 12.21% while it has raised funds at lower cost.

The loan was to part-fund a 300,000-barrels-a-day Paradip refinery in eastern Orissa state, to be commissioned in second half of 2013.