IOC asks govt to compensate OMCs on quarterly basis

IOC reported a whopping loss of Rs 22,451 crore for the June quarter, the biggest by any Indian company. While the delay in compensation for under-recoveries from the government took a toll, the inability to raise retail fuel prices is making things worse.

Goel says petrol has been deregulated, but the PSU is not being able to raise prices. IOC, Hindustan Petroleum Corp and Bharat Petroleum Corp are compensated by the government for selling diesel, kerosene and cooking gas at government-fixed prices. They aren’t for petrol since June 2010, when the government allowed the refiners to fix petrol prices. However, they still have to get the government’s approval to raise prices.

"The environment is not conducive for a petrol price hike," Goel said adding, the company has written the government on petrol under-recoveries and its "unsustainable" USD 16 billion debt. 

IOC sees FY13 under-recovery at Rs 1.8 lakh crore at current prices. "We would resist compensation through oil bonds," Goel said.

On the positive side, Goel said, rupee stability and gross refining margin improvement will be a positive for the second quarter. "We are hopeful of cash compensation approval in monsoon session," he said. 

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee.

Q: There has been some suggestion from New Delhi that you could even be overstating your losses and under recoveries in order to claim compensation. Would you want to comment on that?

A: The under recovery compensation has to be on quarterly basis. The losses, which we have shown in the Q1, are abnormally high, Rs 22,451 crore. So, we have suggested the Government of India that the compensation should be on quarterly basis.

Q: What is your loss on petrol right now per litre?

A: On petrol, under recovery is Rs 3.84 paise from August 16 onwards.

Q: Is there a plan to raise petrol prices because that’s deregulated? Are you going to do it this week?

A: It is deregulated. But we have some constraint, we are not able to increase the prices of motor spirit (MS). Only for that purpose we have taken up with Government of India to make it a controlled product. In our quarterly press conference, it has been suggested by the Chairman that MS should be made a controlled product so that oil companies should not have any under recoveries on this product.

Q: So, you are saying that right now you would like to raise petrol prices by about Rs 4 a litre, but you are not allowed to, right?

A: I cannot say that it's not allowed. But the atmosphere is not in that direction.

Q: Has the government got back on your request to either make it a regulated item or to let you raise prices?

A: Till date, we have not heard anything from the Government of India.