Under recoveries on diesel increasing significantly: IOC

The fuel price hike have been put on hold. Oil minister Jaipal Reddy said that there is no immediate proposal to hike prices of petrol, diesel and LPG.

In an interview to the media, RS Butola, chairman, IOC says the under recoveries on diesel have been increasing very significantly. "They are more than Rs 70 on diesel, more than Rs 347 on LPG and around Rs 32 on superior kerosene oil (SKO)," he adds. Below is the edited transcript of his interview. Q: Do you think you will get the go ahead tomorrow, any indication? A: I would not say that it has anything to do with the parliament session. But it is a matter of consultation with other oil marketing companies. Also, I am admitting that there is consultation also involved with other stakeholders. This is progressing. We will let you know. Q: Now that the Cabinet notice has floated, do you think you might be asked to hold on to the petrol price hike? It might come with diesel and LPG, is that a possibility? A: I can only talk about petrol because that is within our domain. But the under recoveries on diesel have also been increasing very significantly. They are more than Rs 70 on diesel, more than Rs 347 on LPG and around Rs 32 on superior kerosene oil (SKO). Q: Is it necessary to increase petrol price to recover the losses? A: Yes, it is necessary. But we have to take a decision in consultation with my colleagues and other oil marketing companies and also in consultation with stakeholders. So, this consultation process is on. The moment we get clarity and consensus around, this decision will be taken. Q: What is the current borrowing? A: Borrowings are around Rs 87,000-88,000 crore. They had gone to Rs 90,000. Since the last tranches of the under recoveries, which were due last year, have already been paid by August 31. We haven’t received the sanction for the under recoveries of Q1. So, these borrowings will be going up now. We have a deficit of more than Rs 5,000-6,000 crore every month, depending on oil prices. So, our borrowings will go up. If this happens, we will have limitation because we will soon touch the ceiling, which by prudential banking norms also banks lend to us. We hope that the support from the government comes. Otherwise, we will definitely have difficulty. Q: How is the ceiling? A: As of now, it is Rs 110,000 crore.