On September 13, the government decided to raise diesel price by Rs 3.50 per litre. It also hiked excise duty on the fuel by Rs 1.50 to take the total increase in rates to Rs 5 per litre. After including local sales tax, the hike in Delhi came to Rs 5.63 per litre.
While this was the steepest ever increase, it cut the losses on sale of fuel only by Rs 3.50, industry sources said. The oil companies were losing Rs 17.05 per litre on the day of the increase. After taking into account marginal appreciation in rupee value, they now are losing Rs 13.86 per litre, sources said.
Besides diesel, oil firms currently lose Rs 32.70 per litre on sale of kerosene through the public distribution system (PDS) and another Rs 347 per 14.2-kg of domestic LPG cylinder.
Sources said the oil firms are losing about Rs 485 crore per day on sale of diesel, domestic LPG and kerosene below cost.
Of this, loss on diesel alone is Rs 300 crore a day. At the current rate, the three retailers - Indian Oil Corp
(IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) would end the fiscal with a revenue loss of Rs 178,491 crore.
The three firms reported a combined revenue loss of Rs 47,811 crore on fuel sales in the first quarter. Of this, upstream firms like ONGC made good Rs 15,061 crore by way of discount of crude oil they sell to them. The ministry sought cash subsidy for the remaining Rs 32,750 crore but the Finance Ministry has not released any.
In the absence of the subsidy support, IOC reported the highest quarterly net loss by any Indian company at Rs 22,451 crore. HPCL posted Rs 9,249 crore net loss in April-June while BPCL reported a net loss of Rs 8,836 crore. Oil firms would most likely post net losses even in the second quarter as the logjam in Parliament over coal block allocation has meant that supplementary demands for grants are not approved and no subsidy payout is possible till the next winter session of Parliament in November/December.