[1]State-owned Indian Oil Corp, the nation's largest oil firm, on Wednesday reported its worst-ever quarterly net loss of Rs 7,485.55 crore for the second quarter of the 2011-12 financial year due to mounting under-recoveries on fuel sales that were not compensated by the government.
The net loss of Rs 7,485.55 crore for the July-September quarter was in sharp contrast to the net profit of Rs 5,293.95 crore posted by the company for the year-ago period, IOC chairman R S Butola told reporters here.
"This has been an unusual year that witnessed significant price upheaval and rupee depreciation," he said.
"Never before have we witnessed this kind of quarterly losses," he added. IOC's net loss was caused by the company having to absorb about Rs 7,800 crore of unmet losses on the sale of diesel, domestic LPG and kerosene.
State-run firms sell diesel, domestic LPG and kerosene at government-controlled prices, which are way below the market rates.
One-third of the loss is made up by dole-outs from upstream firms like ONGC. The government gives a cash subsidy equivalent to at least half the loss and the retailer absorbs the remaining under-recovery. However, the government has not provided any cash subsidy to the fuel retailers for Q2.
"We had a total under-recovery (revenue loss) of Rs 11,757 crore on selling diesel, domestic LPG and kerosene below cost in the July-September quarter. Of this, Rs 4,300 crore came from upstream firms and we had to absorb the rest," he said.
IOC and its sister public sector retailers currently lose Rs 9.27 per litre of diesel, Rs 26.94 per litre of kerosene sold through the public distribution system (PDS) and Rs 260.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.
Butola said IOC had posted a net loss of Rs 3,719 crore for Q1 and together with the losses of Q2, "It was the worst-ever half-year for us."
HPCL had last week posted a net loss of Rs 3,364.48 crore for the second quarter, while BPCL reported a net loss of Rs 3,229.27 crore.
IOC's turnover increased from Rs 78,208.14 crore in the quarter ended September 30, 2010, to Rs 89,769.60 crore in Q2 of the current fiscal.
Refining margins were a big dampener with the company, which suffered negative returns on turning every barrel of crude oil into petroleum products, as compared to a USD 6.63 per barrel gross refining margin for the July-September quarter of the 2010-11 fiscal.
IOC's borrowings increased from Rs 52,734 crore as of March 31, 2011, to Rs 73,296 crore as of September 30.
Domestic sales of the company's petroleum products increased by 4.6 per cent to 17.693 million tonnes in the first half. Its refineries processed 13.046 million tonnes of crude during the April-September, 2011, period, a 7.5 per cent increase vis-a-vis April-September, 2010.
For the current fiscal, the Finance Ministry has so far provided only a letter promising to give Rs 15,000 crore to the state-run oil marketing companies in Q1. It has not announced any subsidy for Q2.
Of the subsidy support, IOC got Rs 8,200.85 crore and had to absorb Rs 15,509.25 crore in the first half.
During the April-June quarter, the three firms lost Rs 43,526 crore on selling diesel, domestic LPG and kerosene. Of this, the government has agreed to make good 34 per cent of Rs 15,000 crore.
Another Rs 14,509 crore has been provided by oil producers like ONGC, leaving a gap of Rs 14,017 crore.
Of the Rs 21,374 crore under-recovery in the July-September quarter, one-third, or Rs 7,124 crore, was made good by upstream firms like Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL).
The Finance Ministry has been asked to make good the remaining Rs 14,250 crore.
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