Dismissing the “false impression” that they are hiking petrol prices despite having recorded huge profits, the heads of three public sector oil firms have pointed out that without a combined bailout package of Rs. 1,38,500 crore, they would have posted whopping losses in the last financial year.
In a joint statement, the chairmen and managing directors of Indian Oil, Hindustan Petroleum and Bharat Petroleum said that while they had declared nominal profits of Rs. 6,177 crore, this was only because of help from the government and the upstream oil companies ONGC, OIL and GAIL. Without the bailout package – granted so that the firms could maintain their blue chip status and global credit ratings – the trio would have been in the red to the tune of Rs. 1,32,000 crore.
The three oil firms have been under fire ever since last month's steep hike of Rs. 7.50 in petrol prices. Despite a partial rollback, politicians across the spectrum – including two Cabinet Ministers — have condemned the hike, questioning the profits posted by the oil firms.
In their statement, the CMDs insisted that the highly subsidised sale of diesel, domestic LPG and PDS kerosene has put their firms under “huge financial strain.”
With rapidly rising borrowings and a doubled interest burden, the firms “would not have been in a position to raise necessary finance to purchase crude from the international market and maintain uninterrupted supply of petroleum products in the country” without government help, they said.
The statement also dismissed the “propaganda” that the firms were incurring huge administrative expenses by pointing out that 91 to 93 per cent of their entire costs actually go towards crude oil and products bought from outside. With average crude prices rising 32 per cent from the previous year, and the rupee depreciating sharply, the petrol price hike was “absolutely unavoidable,” said the statement.
Bailout package only to maintain their blue chip status
“Highly subsidised sale of diesel, domestic LPG and PDS kerosene put our firms under huge financial strain”