The petroleum ministry has urged the finance ministry to pay Rs 49,090 crore to compensate the losses incurred by the state-run oil marketing companies (OMCs) due to the governments move to not raise consumer price of transport and cooking fuels since June 2011.
If not compensated,the petroleum warned,the three OMCs Indian Oil Corp,Bharat Petroleum and Hindustan Petroleum would have to report losses of Rs 20,000 crore,Rs 10,000 crore and Rs 8,500 crore,respectively,for 2011-12. In several letters to Finance Ministry,including one to the Finance Minister,the oil ministry said that a gap of Rs 38,790 crore remained unpaid in 2011-12 due to non-revision of diesel,kerosene and LPG prices and Rs 10,300 crore due to petrol price freeze and interest compensation on deferred payments.
Mukherjee heads the Empowered Group of Ministers (EGoM) that decides the pricing of diesel,kerosene and LPG,which were last revised June 2011. Though petrol was deregulated in June 2010,an artificial government control still continues.
Of a total under-recovery of Rs 1,39,000 crore incurred by the OMCs in 2011-12,the finance ministry provided Rs 45,000 crore as cash assistance from the Budget and Rs 53,000 crore is to come through discounts from upstream companies. Since the fiscal year got over without a price revision,the ministry has demanded that Rs 49,000 crore be compensated through budgetary support, said an official. Incidentally,Budget 2012-13 provides for only 40,000 crore as cash support and if that money is provided,only IOC and BPCL stand to gain with net profits of Rs 900 crore and Rs 250 crore,respectively,while HPCL will have to report a loss of Rs 60 crore. But if the budgeted Rs 40,000 crore is used for non revision of prices in last year,the Rs 1,89,000 crore estimated as this fiscals under-recovery of OMCs will have to be paid by the tax payer.
Using $120 per barrel price of crude oil with an exchange rate of Rs 50 to a US dollar,the OMCs could lose Rs 1,13,000 crore on diesel,Rs 32,000 crore on kerosene and Rs 44,000 crore on LPG in 2012-13 if the EGoM fails to raise the retail price. And if the artificial price control on petrol continues,they would lose an additional Rs 5,000 crore each quarter,said the official.