By IANS,
New Delhi : Three state-run oil marketing companies Sunday said they are under “huge financial strain” due to selling diesel, kerosene and cooking gas at subsidised rates and would have reported a combined loss of Rs.132,000 crore had the government not assisted them.
“A false impression is being created in some sections that the oil marketing companies have recorded huge profits in 2011-12. On the contrary, the OMCs have been incurring huge losses,” chairmen and managing directors of Indian Oil, Hindustan Petroleum and Bharat Petroleum said in a joint statement.
The companies incurred losses due to sale of three products – diesel, liquefied petroleum gas (LPG) and kerosene – at highly subsidised prices, it said.
It is only after the assistance of Rs.83,500 crore from the government and Rs.55,000 crore from the upstream oil companies Oil and Natural Gas Corporation, Oil India Ltd and Gas Authority of India Ltd, totaling Rs.138,500 crore, that the three public sector OMCs could declare nominal profits.
“Had this assistance not been given, the three OMCs would have reported a combined loss of Rs.132,000 crore,” the CMDs said.
The oil marketing companies together had a combined turnover of Rs.833,000 crore during 2011-12. Against this, they had declared a combined profit of Rs.6,177 core – 0.7 percent of their turnover.
This level of profit is not adequate for OMCs to enable them incur huge expenditure on continuous modernisation, making available environmentally compliant fuels, laying of pipelines, enhancing storage, and development of other infrastructure.
“It is important to note that the OMCs are enabled to announce at least nominal profits for maintaining their blue chip status and credit ratings at the global level,” the statement said.
Oil marketing companies last month announced the steepest ever hike in petrol prices.
Oil marketing firms were criticised for the move after they reported huge increase in profit.
However, CMDs of the three oil marketing companies clarified that the profits were nominal and mainly due to the help from the government and upstream firms.
“Because of the highly subsidised sale of diesel, domestic LPG and kerosene, the OMCs are under huge financial strain,” chief of the three state-run firms said.
Their combined borrowings have gone up from Rs.97,000 crore in March 2011 to a whopping amount of Rs.1,28,000 crore in March 2012.
Similarly, their interest burden has gone up from Rs.4,700 crore in 2010-11 to Rs.9,500 crore in 2011-12.
If the government and upstream assistance was not made available to the OMCs, to make good their losses, they would not have been in a position to raise necessary finance to purchase crude from the international market and maintain uninterrupted supply of petroleum products in the country.