The IOC Chairman, R S Butola has been quoted as saying, "Even after the hike, we are today losing Rs. 4.58 per litre. After including VAT, the desired increase at retail level comes to Rs. 5.50 a litre," Expressing the IOC"s desire to hike the rate taking into consideration the average price of crude oil in the first fortnight of May.
Starting June 1st, the average price of the crude oil in the second half of May was taken after the international rates have been moderated that calculated the IOC"s loss at Rs. 1.15 per litre. Thus, after including VAT, the expected hike in Delhi will be around Rs. 1.35 a litre.
The IOC had seen a sharp decline in revenue at 29.7 per cent drop in net profit for the fourth quarter that ended Mar 31 after having to bear the brunt of government controlled price of selling fuel. The Indian Oil Corp had to absorb Rs. 4,845 crore of loss on fuel sales during 2010-11 fiscal after accounting for cash subsidy from the government and assistance from upstream firms ONGC/GAIL.
Butola also stated in strong terms, “We will have to take a view (on hiking petrol price) soon. Government is not compensating us for selling petrol at below international cost since June 2010 when its pricing was freed."
He added, “There were Rs. 3,803 crore of net under-recovery (revenue loss) on diesel, domestic LPG and kerosene during 2010-11. Also, there was an under-recovery of about Rs. 1,000 crore on petrol as we did not raised prices in line with international parity despite government freeing petrol price from control in June last year."