India’s Navratna oil marketing companies — Indian Oil, BPCL and HPCL — are set to report another quarter of heavy losses as they have failed to get compensation from the government for selling fuels below cost.
As a result, the trio will see a further reduction in their net worth to a critical level when they announce their results on November 9.
The three oil marketing companies sell diesel, LPG for domestic use and kerosene through public distribution system at prices that are substantially below their costs, in accordance with the mandate of their majority shareholder, the government of India.
In return, a small part of their losses is made good by discounts from upstream PSUs like ONGC, Gail and Oil India. The larger share of losses is made good by the government.
Petroleum planning and analysis cell (PPAC) under the petroleum ministry calculates the industry’s under-recoveries.
During the June ’12 quarter, the three oil marketers together had posted an unprecedented net loss of . 40,536 crore as the dues from government did not arrive. A similar situation is expected to repeat for the September quarter with the OMCs not getting compensation from government so far.
“We have not received even a single rupee from the government for entire April to September period—neither the money, nor the letter specifying the amount they will pay,” a highranking official in an OMC said.
An official from another OMC said, “With the budgetary provisions for petroleum subsidies over, the government must get parliamentary approval in the winter session to pay oil companies.”
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