State-run oil marketing companies Indian Oil, Hindustan Petroleum and Bharat Petroleum are likely to lose Rs. 45,478 crore this fiscal on selling fuel below cost price, Petroleum Minister Murli Deora has said.
Addressing the Parliamentary Consultative Committee on Thursday evening, Mr. Deora said such a huge subsidy support was unsustainable in long run.
“Today, the public sector oil marketing companies incurs an under-recovery (revenue loss) of Rs. 3.10 per litre on petrol, Rs. 2.55 a litre on Diesel, Rs. 17.30 per litre on PDS kerosene and Rs. 241.00 on each 14.2 kg cylinder of domestic LPG,” he said.
Mr. Deora said his ministry has sought oil bonds of Rs. 20,871 crore from the Finance Ministry to compensate the three firms for loss on PDS kerosene and Domestic LPG but bonds are yet to be issued.
“The delay in oil bonds is reflecting on their financial performance,” he said. In the second quarter ended September 30, IOC reported a meagre profit of Rs. 284 crore while BPCL and HPCL reported losses of Rs. 159 crore and Rs. 137 crore respectively.
“The OMCs are the backbone of the country’s energy security and, hence, their financial health is a cause of concern for us,” he said, adding the report of the Expert Group under Kirit Parikh on sustainable fuel pricing policy was expected in January.
Deora said the Government had taken measures to insulate the consumer from the inflationary impact of high global oil prices last year.
The government had in the last fiscal issued oil bonds worth Rs. 71,292 crore to the three fuel retailers while upstream firms absorbed another Rs. 32,000 crore of oil price impact.
“However, this kind of subsidy support is not sustainable in the long run,” he said.
With more than 75 per cent of the nation’s crude oil requirement met through imports, international oil prices play a decisive role in the domestic pricing of petroleum products.
The international oil prices had seen unprecedented rise and volatility in the recent past. During 2008, the price of the Indian basket touched $142 per barrel in July before crashing to $35 per barrel in December 2008.
Mr. Deora said 203 blocks have been awarded since 2000 under the New Exploration Licensing Policy (NELP) to boost domestic output and cut import dependence.
An investment of over $10 billion has been committed in exploration in these blocks, of which $5.5 billion has already been spent. An addition expenditure on development of discoveries of $6.4 billion has also been incurred, he said.
“Under NELP, 73 oil and gas discoveries have been made in 21 blocks in Cambay onland, North East Coast and Krishna Godavari deepwater areas,” he said