With the subsidy component for sale of petroleum products at subsidised prices from the government still to come, Indian Oil Corporation (IOC), on Thursday, announced the biggest quarterly net loss of Rs.22,451 crore.

HPCL posts Rs. 9,249 cr loss

Another public sector undertaking Hindustan Petroleum Corporation Limited (HPCL) also posted a net loss of Rs.9,249 crore in April-June. The government has not compensated oil marketing companies (OMCs) for selling diesel, domestic LPG and kerosene below cost this year as the originally marked Rs.40,000 crore subsidy has all been exhausted in paying compensation for last fiscal.

IOC Chairman R. S. Butola is quick to sound a warning note that it could soon exhaust the limit to which it could take debt, and sourcing crude oil would become difficult as international sellers don’t give credit. The government should realise that OMCs were on the brink and the issue of fuel subsidy need to be addressed urgently without any further delay, Mr. Butola told journalists here.

The three fuel retailers are projected to lose a record Rs.177,715 crore this fiscal as they sell diesel at a discount of Rs.12.13 a litre to its cost, kerosene at Rs.28.54 a litre and LPG at a discount of Rs.231 per 14.2-kg cylinder.

For IOC and other OMCs, things have gone from bad to worse due to the continued slump in the value of rupee against the U.S. dollar making import of crude oil costlier. “We had a net loss of Rs.22,450.95 crore in the April-June quarter as compared to Rs.3,718.70 crore loss in the same period a year ago,’’ Mr. Butola said.

This was primarily because IOC was not compensated Rs.17,485 crore for selling diesel, domestic LPG and kerosene at a discount to its cost and the company lost another Rs.950 crore on selling below its cost. IOC’s borrowings have gone up by a huge Rs.15,000 crore in the April-June quarter to Rs.90,923 crore. The company could borrow a maximum of Rs.110,000 crore, and if losses on fuel sales continued that borrowing limit would soon be reached, after which it would not get any finances impacting the company’s ability to buy crude oil from international markets, he said.

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