Flush with Cash, Oilcos may Cut Petrol Price 2/L

STATE REFINERS POST ROBUST Q4 NOS.

IOC, HPCL and BPCL clock 3-fold jump in net; ONGC gains on weak rupee, costly oil

State-run oil companies are ready to cut prices of petrol by about . 2 per litre after reporting strong earnings, signalling a surprise turnaround in the sector that scared investors with talk of astronomical losses from subsidised fuel sales. 

Oil marketing companies could cut retail price of petrol by about . 1.67 per litre (about . 2 after taxes) from June 1 in view of the drop in the average rupee price of petrol in the international market, Hindustan Petroleum Corp Chairman & Managing Director S Roy Choudhury told reporters. HPCL's fourth-quarter net profit jumped to . 4,631 crore, more than four times its earnings a year ago. IndianOil, which reported an over-three-fold jump in fourthquarter net profit to . 12,670 crore, is also keen to pass on the benefit of lower international prices to customers. IOC Chairman RS Butola said: "We will pass on the entire benefit to consumers. I would like to pass on 50 paise, 70 paise or 90 paise, whatever we gain, to consumers in the next pricing cycle." Profits of oil marketing companies were boosted by the highestever contribution of . 44,466 crore from Oil & Natural Gas Corp (ONGC). Despite the generous contribution — given through state-mandated discounts on crude oil sales — ONGC's fourthquarter profit doubled to . 5,644 crore while PAT for the entire fiscal rose 33% to . 25,123 crore. 

The state exploration company supplies crude oil at a rate linked to the dollar price of international grades of oil. The depreciation of the rupee and an increase in international prices in the last quarter, thus, led to windfall gains for ONGC. 

State-run refiners had earlier complained that their combined revenue loss from the sale of fuel at government-determined rates would amount to . 1.38 lakh crore in 2011-12, and they would post losses for the full year. 

However, contributions from the government and upstream players such as ONGC, Oil India and Gail India have propped up their balance sheets. 

Citing prospects of heavy losses, oil marketing companies had raised the pre-tax price of petrol by . 6.28 per litre last Wednesday, immediately after the budget session of Parliament.