OMCs see loss of Rs 2,10,000 cr in FY09

Sajeet Manghat , CNBC-TV18

The Indian crude oil basket is also at USD 129.08 per barrel almost at par with international crude prices. It will mainly impact the oil marketing companies and the upstream companies. Upstream companies because they will have to bear nearly one-third of the entire burden. Oil companies revenue loss is seen at nearly Rs 210,000 crore for FY09.

From that perpective, the current formula for oil sharing is around 33% for upstream companies, 18-20% for OMCs and for the government through oil bonds is 47-50%.

So we are staring at roughly Rs 98,000 - Rs 102,000 crore oil bonds issue only. But the burden will come down to upstream companies and oil marketing companies.

The under recovery situation for oil marketing companies is worsening by the day. Industry insiders and experts are divided on the possible measures that can revive the ailing oil PSUs.

Ajay Bodke , Senior Fund Manager, StanChart MF, said, "I don't think that the price hikes that would come through would in any way help these oil companies in the long term. You need to have 35% price increase in petrol, 67% in price of diesel, a doubling in price of LPG cylinders and nearly 3-3.5% times increase in kerosene price for the oil companies, not to lose a single rupee on a daily basis vis-a-vis the Rs 550 crore that they are losing today on a daily basis. I am not suggesting that we could anyway approach close to these numbers, we will have to be content with a cosmetic price increase and the majority of relief has to come from a duty rejig."