Oil companies face Rs 2 lakh cr loss

Under recoveries of the public sector oil marketing companies is feared to cross a mammoth Rs. 2 lakh crore if the crude oil prices continue to remain at the current high levels, oil secretary S Sundereshan said in Ahmedabad on Wednesday.

"The year 2011-12 has just started and presently, the average crude price is hovering around $120 per barrel. If it continues to remain at these levels for rest of the year, the under-recoveries for the PSU OMCs may cross Rs. 2 lakh crore," Sundereshan told reporters on the sidelines of an ONGC function held at Kalol near Ahmedabad.

This will be the highest ever revenue loss or the under-recovery by oil retailing companies in India.

Last year in 2010-11 the under-recoveries of the PSU OMCs were pegged at around Rs. 78,000 crore (Rs. 780 billion), which was up from Rs. 46,000 crore (Rs. 460 billion) witnessed during 2009-10.

As per the government data, the under-recoveries had shot up to over Rs. 1 lakh crore during 2008-09 when crude oil prices had touched an all-time high of $147 per barrel.

"Considering the high levels of the crude prices, the government will examine the situation and would take a call so that OMCs will not suffer," the secretary said.

Due to the regulated price mechanism, the three PSU OMCs, including HPCL, IOC and BPCL, are losing around Rs. 16 per litre on diesel, Rs. 25 per litre on kerosene and Rs. 315 on domestic LPG cylinder of 14.2-kg.

During his address, Sundereshan informed about the government's focus on increasing LPG penetration in the country.

"Currently, we have around 12 crore LPG connections covering nearly 50 per cent of the population of the country, while by 2015 this will increase to 75 per cent," he said adding that the gas pipeline network would rise from the current 8,000 kilometres to 14,000 kilometres in next sixteen months with addition of 6,000 kilometres by state-owned gas transmission utility, GAIL.

Commenting about the gas availability for the industry in India, Sundereshan informed that gas availability in the country would increase substantially as additional import capacities would come up at three LNG import terminals.

"At Dahej we are targeting the imports to touch 10 million tonnes, while Dabhol LNG terminal will have 2.5 million tonnes of capacities, which will get operational in the current fiscal. Also, Cochin LNG terminal will have 5 million tonnes of capacity," he said.