Oil Psu's losses due to under-recoveries, Minister

New Delhi, Mar 12 (UNI) Losses suffered by the country's oil PSUs are mainly attributable to huge under-recoveries on sale of petrol, diesel, kerosene and domestic LPG, consequent to non-revision in retail selling prices of these products in line with international prices, Minister of State for Petroleum Dinsha Patel has said.

He said oil marketing public sector undertakings -- BPCL, HPCL and IBP -- have suffered huge losses. While IndianOil reported a net profit of Rs 889.66 crore (including a loss of Rs 5.83 crore during October-December 2005) during April-December, HPCL and BPCL posted losses of over Rs 1,600 crore each at the end of first nine months of the current financial year.

The reason, the Minister said, was rising price of global crude, while domestic prices were not increased to that extent.

Mr Patel said the government has gradually reduced and eliminated both customs and excise duty on PDS kerosene and domestic LPG.

The customs duty on kerosene and LPG has been reduced from 10 per cent in March 2004 to nil currently. In March 2004, the customs duty on petrol and diesel was reduced from 20 per cent to 10 per cent.

The ad valorem component of excise duty on petrol and diesel has also been reduced, considering the impact of prices on transportation sector.

The Minister said ad valorem excise duty for disel has been reduced from 14 per cent in March 2004 to 8 per cent.

For petrol, the reduction has been larger from 30 per cent in March 2004 to 8 per cent at present which has partly offset the volatility in prices.

Mr Patel said the government has also decided to issue interest-bearing oil bonds worth Rs 11,500 crore to oil marketing companies (OMCs) during this financial year in view of the losses suffered by them in marketing sensitive petroleum products.

''The bonds will be distributed among the OMCs in proportion to the losses suffered by them,'' he added.

The bonds, which have a maturity of three to nine years, can be traded by the oil companies to raise funds for meeting their immediate cash needs.

With this, IndianOil can recover losses of Rs 3,449 crore it has incurred on the sale of kerosene and cooking gas with the Government issuing the first tranche of oil bonds. Bharat Petroleum and Hindustan Petroleum will also be able to recover losses of Rs 1,101 and Rs 1,200 crore, respectively.

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