Just last week, IOC lobbied hard for increasing petroleum prices in Lanka, where it sells 350,000 tonnes annually through a separate company.
Inaction in India means refiners will take Rs 5,000 cr blow in April alone.
MUMBAI: Just last week, Indian Oil Corporation lobbied hard for increasing petroleum prices in Sri Lanka, where it sells 350,000 tonnes annually through a separate company. The price hike was a steep Rs 8 a litre.
India's competing economy China increased petrol price by 5.1% and diesel price by 3.4% last month. Other Asian countries Malaysia, Thailand and Philippines have also increased their petroleum prices by an average 10-15%.
What these countries are doing is to align the retail prices with the international prices thereby preventing oil companies to bear the entire brunt of increased prices.
In India, the situation is different with oil marketing companies, Indian Oil Corporation-IBP Ltd, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd, all set to take a hit of around Rs 4,722 crore in the month of April itself.
"IndianOil alone will incur a gross revenue loss (exclusive of burden sharing by any other entity) of Rs 2,200 crore in April," said a senior IndianOil executive.
The Indian basket of crude is calculated by giving Oman/Dubai crude and Brent oil weightage in the ratio of 58:42.
The required increase in the retail price of petroleum products is calculated based on international product prices which on Friday stood at at $85.98 barrel for kerosene, $84.56 for diesel and $82.98 for petrol.
The saving grace has been the LPG prices that climbed unprecedented heights last year but have come down in April to $430 from $620 in February.
What is worrying the oil companies more is that this time of the year petroleum prices usually come down. “They gain only around August when winter purchases begin," said an official.
The estimated annualised under recoveries of OMCs will at a record high o about Rs 57,000 crore during 2006-07 on the basis of April 2006 price of no revision in domestic price is carried out.
Compare this to Rs 39,600 crore gross under-recoveries suffered by these companies during 2005-06.
The government has issued oil bonds worth Rs 11,500 crore to these companies and upstream firms shared losses to the extent of Rs 14,000 crore. Still, Indian Oil, HPCL and BPCL will marginally book profits.
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