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STATE-OWNED Indian Oil Corporation (IOC) has posted a net loss of 3,388 crore in the first quarter (Q1) of 2010-11 due to selling key petroleum products below market prices. The country's largest refiner had made a net profit of 3,683 crore in the same quarter of previous fiscal year.
IOC chairman BM Bansal said, "The under-recovery (revenue loss) on account of non-realisation of market-related prices for petrol, diesel, PDS kerosene and LPG (cooking gas) for the quarter was 7,343 crore." It was 2,961 crore in the same quarter of 2009-10.
State-owned oil companies are forced to sell petrol, diesel, kerosene and cooking gas at government-determined rates which are often below cost. On June 25, the government announced freeing pump price of petrol but has forced them to revise prices only once in a month.
IOC's revenue loss would have been higher but for the 3,671 crore contributions from upstream firms — Oil & Natural Gas Corp (ONGC), GAIL India and Oil India.
The government is silent on paying any compensation to the oil company losing revenues due to selling key petroleum products at controlled prices. Until recently it used to partially compensate public sector oil companies for their losses by issuing oil bonds or paying cash. It is yet to announce a mechanism to meet over 20,000 crore revenue losses of the three oil companies (IOC, BPCL and HPCL) in the first quarter of 2010-11.
Poor refining margin and loss due to variations in foreign exchange rates also contributed in the sharp decline in company's financial performance. IOC's gross refining margin slipped from $7.36 per barrel in April-June 2009 to $3 per barrel in the first quarter this year, signifying a difference of 2,272 crore.
"The decrease in refining margin in Q1 (2010-11) was due to reasons beyond our control. Inventory loss and foreign exchange fluctuations were major contributors otherwise physical performance (of refineries) was very good. Capacity utilisation was 104% and we made 10 cent extra on every barrel this quarter compared to previous year," IOC director (refinery) BN Bankapur told ET.
During April-June 2010 IOC's inventory gains slipped to Rs 517 crore (compared to Rs 1,733 crore in Q1 of previous year) and it lost about Rs 176 crore due to currency fluctuations (compared to a gain of 390 crore in Q1 previous year). IOC's turnover, however, went up by 23% to 77,965 crore in first quarter this financial year compared to Rs 63,530 crore during the previous year.
IOC chairman BM Bansal said, "The under-recovery (revenue loss) on account of non-realisation of market-related prices for petrol, diesel, PDS kerosene and LPG (cooking gas) for the quarter was 7,343 crore." It was 2,961 crore in the same quarter of 2009-10.
State-owned oil companies are forced to sell petrol, diesel, kerosene and cooking gas at government-determined rates which are often below cost. On June 25, the government announced freeing pump price of petrol but has forced them to revise prices only once in a month.
IOC's revenue loss would have been higher but for the 3,671 crore contributions from upstream firms — Oil & Natural Gas Corp (ONGC), GAIL India and Oil India.
The government is silent on paying any compensation to the oil company losing revenues due to selling key petroleum products at controlled prices. Until recently it used to partially compensate public sector oil companies for their losses by issuing oil bonds or paying cash. It is yet to announce a mechanism to meet over 20,000 crore revenue losses of the three oil companies (IOC, BPCL and HPCL) in the first quarter of 2010-11.
Poor refining margin and loss due to variations in foreign exchange rates also contributed in the sharp decline in company's financial performance. IOC's gross refining margin slipped from $7.36 per barrel in April-June 2009 to $3 per barrel in the first quarter this year, signifying a difference of 2,272 crore.
"The decrease in refining margin in Q1 (2010-11) was due to reasons beyond our control. Inventory loss and foreign exchange fluctuations were major contributors otherwise physical performance (of refineries) was very good. Capacity utilisation was 104% and we made 10 cent extra on every barrel this quarter compared to previous year," IOC director (refinery) BN Bankapur told ET.
During April-June 2010 IOC's inventory gains slipped to Rs 517 crore (compared to Rs 1,733 crore in Q1 of previous year) and it lost about Rs 176 crore due to currency fluctuations (compared to a gain of 390 crore in Q1 previous year). IOC's turnover, however, went up by 23% to 77,965 crore in first quarter this financial year compared to Rs 63,530 crore during the previous year.
BM Bansal
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