NEW DELHI: The Indian Oil Corporation (IOC) is losing Rs. 100 crore daily on sales of petroleum products owing to retail prices being much lower than the actual production costs. At the same time, the company remains in the black and has managed a marginal rise in net profit from Rs. 4,891.38 crore in 2004-05 to Rs. 4,915.12 crore in 2005-06.

According to IOC Chairman Sarthak Behuria, this was possible after the Government issued Rs. 6,571-crore worth of oil bonds and upstream companies gave a discount of Rs. 2,666 crore to the refining companies.

Addressing a press conference here on Friday, Mr. Behuria said the proposals for a price hike of Rs. 3-4 a litre for petrol and diesel were not sufficient to compensate for the growing under-recoveries.

Under-recoveries were estimated at Rs. 8,300 crore in the first quarter of the current fiscal (April-June 2006), while the total revenue loss in 2005-06 was pegged at Rs. 14,011 crore. The level of price hike needed in petrol, he said, was Rs. 10.55 a litre, in diesel was Rs. 9.88 a litre, in kerosene was Rs. 16.78 a litre and in LPG was Rs. 120 a cylinder.

During April-May, IOC lost Rs. 397 crore on sale of petrol, Rs. 2,490 crore on diesel sale, Rs. 1,754 crore on kerosene and Rs. 880 crore on LPG, he said.

Mr. Behuria said other measures, apart from merely raising prices, would have to be taken to make up for the huge under-recoveries suffered by the oil marketing companies. This could include excise duty cuts and issue of oil bonds as had been done in the past. In this context, he noted that the total contribution of the oil sector to the Central Exchequer was estimated at Rs. 43,662 crore during 2005-06, an increase of 18.5 per cent.

Panipet refinery

The IOC chief said the company had a vision of emerging as a $60-billion energy major by 2011-12 from the current revenues of $35 billion. Among the major projects, he said, doubling of capacity at Panipat refinery from six to 12 million tonnes annually was due for completion soon.

The IOC board had also cleared a 15-million-tonne grassroots refinery-cum-petrochemicals project at Paradip in Orissa together with a product pipeline to Ranchi at acost of Rs. Rs. 24,000 crore.

Expansion of retail outlets

Regarding expansion of retail outlets, he said the entry of new players like Reliance Industries had reduced the IOC market share.

The new entrants now have 14 per cent share in diesel and five per cent share in the petrol market, he said. The IOC was, therefore, planning to go in for consolidation and improving the organisation before going ahead with a big expansion.

He said 1,000 kisan seva kendras were being opened but other new retail outlets might be only 500, with the focus being to examine outlets with low sales performance.

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