Loss laden OMCs seek ad-hoc price hike on diesel

Saddled with record high under-recoveries on sale of fuel products, oil marketing companies have sought the oil ministry's permission for an ad-hoc price hike of around Rs 2/litre on diesel.

Currently, state-run Hindustan Petroleum , Bharat Petroleum and Indian Oil Corporation are losing around Rs 15/litre on sale of diesel and approximately, they incur losses of Rs 200 crore each day on sale of this fuel, says an official at BPCL.

"We have recently written to the ministry to give us an interim relief by way of an ad-hoc price hike as we have already incurred Rs 32,000 crore revenue loss on sale of diesel, kerosene and liquefied petroleum gas (LPG) in the previous quarter," said an official who further said that in recent months diesel consumption has been growing at close to double digits, owing to factors like power shortages and robust commercial vehicle sales and higher sales volume means more losses to oil retaillers.

However, BPCL spokesperson said they have not heard from the ministry on the diesel price hike.

Diesel price was last raised last year by Rs 3/litre on diesel and since then OMCs have been crying hoarse about the insufficient subsidy they get on various fuel products including petrol which was de-regulated in 2010 but its rates haven't moved in tandem with cost because of the government's aim to keep inflation in check. Even now, OMCs claim that they are losing around Rs 4 on sale of petrol.

During 2011-12, the three OMCs lost Rs 1,38,541 crore in revenues on selling diesel, LPG and kerosene. To make up, the government gave Rs 83,500 crore in cash assistance to the OMCs while upstream firms like Oil and Natural Gas Corp (ONGC) chipped in Rs 55,000 crore and the remaining was borne by OMCS themselves.

shaheen.mansuri@network18online.com