• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Mumbai, Aug. 19 In less than three weeks, the public sector oil refiners have seen losses on subsidised fuels jump 30 per cent even while global crude prices are firming up at $70 a barrel.

On August 1, the annual projected losses for the troika of IndianOil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation were Rs 32,000 crore. Today, they are nearly Rs 43,000 crore thanks largely to diesel and petrol slipping deeper into the red with losses of Rs 2.33 and Rs 4.40 a litre respectively, compared to 39 paise and Rs 1.73/litre in the beginning of this month.

On the other hand, cooking gas (LPG) and kerosene losses have remained flat at Rs 159 a cylinder and Rs 16 a litre. There is no telling, though, which way LPG is heading with one school of thought insistent that prices are set to fall in the coming weeks. However, winter is only a few months away in Europe and the US which could translate into a price spiral.

From the public sector refiners’ point of view, there is reason to be worried especially about diesel. The losses could have jumped six-fold from last fortnight and will, in any case, be compensated by Oil and Natural Gas Corporation with a little help from Oil India and GAIL (India).

The bigger fear, though, is that with the threat of power cuts looming large in many parts of the country, there will be a tendency to use more diesel for generator sets. Oil industry sources say that consumption has seen a marked increase in the last two months, especially in the eastern and central regions.

Also, the drought could lead to a shortfall of hydel power which, in turn, will result in resorting to diesel.

Should losses on diesel touch Rs 10/litre in the coming months, even ONGC will have a tough time making good the losses to the refiners.

In this case, the Centre will have to step into the picture and issue oil bonds which are due, in any case, to make good LPG and kerosene losses for this fiscal.

Petrol, likewise, has seen a sharp spurt in losses over the last fortnight but this is still not a “worry area” yet because consumption will not go out of control as in the case of diesel.

“Both are essentially transport fuels but diesel being more affordable is diverted to other applications and this aggravates the problem,” sources said.

The Centre will also be loathe to increase diesel prices because of its inherent ability to stoke inflation at a time when food prices are getting out of control and customers are increasingly finding it hard-pressed to balance their household budgets.

More Stories on : Petroleum | Petroleum | Bharat Petroleum Corporation Ltd | Hindustan Petroleum Corporation Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line