We are still losing Rs 3-4/ltr on diesel sale: BPCL's CMD
After the government allowed fuel retailers to hike diesel price at regular intervals, companies have witnessed a significant cut in under-recoveries.
April 30, 2013 / 17:48 IST
After the government allowed fuel retailers to hike diesel price at regular intervals, companies have witnessed a significant cut in under-recoveries.
For instance, Bharat Petroleum which was earlier incurring a loss Rs 13-14/litre is now losing Rs 4/litre on sale of the fuel, thanks to marginal hike of Rs 40-50 paise/litre every fortnight since January.Oil companies including Hindustan Petroleum (HPCL) and Indian Oil Corp (IOC) along with BPCL are considering a hike in diesel price. The last time they raised price was on April 1.In an interview with CNBC-TV18, RK Singh, chairman and managing director, BPCL said, though diesel price hike is in the offing, he cannot exactly disclose when the company will raise price of the fuel. He further said that for FY13, total under-recoveries are around Rs 37,000 crore of which Rs 27000 crore has already been compensated by the government and upstream companies and the balance amount will also be subsidised soon.Singh also expressed optimism on the oil ministry’s proposal of revising petrol price on daily basis, in line with international rates and the rupee's value against the dollar.If price moves in tandem with global rates, customers will be benefited from lower rates and vice-versa. However, customers will not mind a small increase unlike current scenario where Re one hike in petrol price also becomes an issue.Below is the edited transcript of his interview to CNBC-TV18.Q: Will we hear a cut in petrol price today, and anything on diesel?A: I am not updated because I was out of the country. I think there is scope but I have no concrete information. Q: Do you think there is a case for a cut after studying the global trajectory of petrol prices?A: I think there is a case for a cut in petrol prices. Generally, we study 15 days average and this time the average trend is sliding. Q: Will diesel price hike be considered today?A: Yes, diesel price hike is on the card, so we will have to decide as to when we can do that as losses on under recoveries and diesel have also come down and if you take last 15 days average, it is around Rs 4. It came down from Rs 13-14 to Rs 4. So, it is good news for all of us. Once I am back in Mumbai, we will know when to increase 40-50 paise. Q: How high is the possibility of diesel price being increased by today or tomorrow? A: Let us not guess it. Q: Last time we were let to believe that you had to wait for the Parliamentary session to get over and that is what happened. We got the diesel price hike only after Parliament session ended. So, should we also therefore wait till May 10 or thereabouts till this sessions ends for the diesel price hike to be announced?A: I can’t confirm on this.Q: What is the situation in petrol? How much more money are you making?A: There is no loss on petrol. Q: I mean over recovery. Are you making some extra profit on petrol?A: We do not make profit of consumer. There is nothing like extra profit. We are in the business to make profit and there is no doubt about it, but it is nothing like extra. So, whatever is reasonable for us to recover our cost and make some money and that is happening. We have been reducing the petrol price every 15 days. Therefore, there is a case of further reduction, but I do not know how much.Q: There was talk that petrol price revision could be considered more frequently than the current fortnight as well perhaps eventually go to daily. Is that something which is being considered and how likely is it and if yes, how soon?A: That is in the offing. If the changes take place on daily basis then the changes both upward and downward will only be a matter of few paise and that will not hurt the consumer and that will not make much of difference as far as the market is concerned. But there is some issue around mechanism as to how do we do it, we have to develop some package and so people are working on this subject. As soon as we are ready with the package, we might introduce.Q: What is your total under recovery in the Q4?A: the under recovery for the entire year for BPCL is around Rs 30,000 crore, out of that we have already received Rs 27,000 crore from the government and upstream companies by way of compensation and the balance 11,000 crore, we expect the government will reimburse that also because Q4 result is yet to be announced, the entire year result is yet to be announced. Therefore, I cannot talk about the financials of last year.Q: The valuation of your Mozambique asset appears to be a moving target with some of the asset holders looking to sell their stake. What is the current valuation of that asset?A: Twenty percent is on sale; 10 percent of Videocon and 10 percent of Anadarko. Now the bills have been received but nothing is known as to what has been quoted by the bidders. However, going by the last figure, the transaction that took place between PTT Exploration & Production (PTTEP) of Thailand and Conergy was USD 2 billion for 8.5 percent. So, if we go by that kind of valuation then our 10 percent will be USD 2.5 billion.
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