The Hindu Business Line : Indian Oil, IBP to lose Rs 8,800 cr on subsidies, under-recoveries

INDIAN Oil Corporation will have to bear a Rs 7,350-crore burden of cooking gas and kerosene subsidies in 2004-05. The company will also lose profits of Rs 890 crore because it has not been able to raise petrol and diesel prices for the last few months.

If the losses of subsidiary IBP Ltd are included, Indian Oil's subsidy and losses in 2004-05 are pegged at Rs 8,800 crore, said Dr N. Kannan, Director (Marketing), IOC.

The company would have sold close to 48 million tonnes of petroleum products in 2004-05, its highest volumes in five years, Dr Kannan said. IOC gained 0.7 per cent market share in diesel sales and 0.8 per cent in petrol sales, he said.

The company hopes to add close to 1,000 new retail outlets in 2005-06 compared to the 1,005 pumps added this year. The IOC has a 10,000-strong retail network now.

The company has planned an outlay of Rs 2,500 crore for its marketing effort in 2005-06. Of this, Rs 1,150 crore will be spent on setting up new outlets and modernising old ones.

IOC is planning a foray into the rural markets and has set up 10 Krishi Seva Kendras to cater to rural customers, Dr Kannan said. The company has tied up with ICICI Bank to provide credit to farmers and is looking at entering agreements with other companies to provide rural customers with agriculture equipment, insurance, medicines and pesticides at the planned outlets.

Meanwhile, it is learnt that the industry has demanded that the Government allow a hike in petrol and diesel prices at the earliest on account of increase in excise duty. The demand is that petrol price be hiked by Rs 2.50 a litre and diesel by Rs 0.65-0.70 a litre. The other demand is for a Rs 0.50 a litre hike for both petrol and diesel to factor in the increase in cess for road development to Rs 2 per litre from Rs 1.50 per litre currently. Oil companies have also claimed loss of profits because of the sharp rise in crude oil prices, which crossed $51 a barrel in the last quarter this year. Higher duties have forced them to sell petrol at below refinery transfer prices in March, they said.

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