Fuel facts

New Delhi, March 29: Aiming to put a lid on losses, Indian Oil Corporation (IOC) wants to reduce supply of kerosene to the public distribution system (PDS).

The oil major has argued with the petroleum ministry that it was supplying a disproportionate amount of the cooking fuel to the PDS. The navratna wants to link its contribution to the PDS with its market share of petrol and diesel, which is around 40 per cent. IOC now contributes 55 per cent of the kerosene to the PDS.

The oil major?s contribution has been determined by its market share of petroleum products that includes heavy oils sold to industrial units, bitumen, aviation turbine fuel and lubricants, apart from petrol and diesel. The PSU oil companies are losing Rs 13.75 on every litre of kerosene sold through PDS. The loss in case of LPG is over Rs 200 a cylinder

The government has directed upstream companies ONGC and OIL to give Rs 12,000 crore to the downstream trio ? Indian Oil, Bharat Petroleum and Hindustan Petroleum ? as reimbursement for selling PDS kerosene and LPG at a loss. The government has also issued Rs 11,500 crore of bonds to the three PSU majors.

Despite these inducements, the three companies are floating in the red zone, with IOC estimating its losses to be around Rs 4,500 crore in this fiscal.

While the petroleum ministry is aware that the IOC proposal will improve the PSU?s bottomline, it may not approve the move due to political considerations.

Meanwhile in LPG, the oil companies are caught in a paradox of higher sales leading to more losses. They have also restricted supply to distributors who are allegedly diverting the cheap LPG for use in cars and restaurants.

IOC recorded a sales turnover of Rs 150,000 crore in 2004-05 and expects to end the current fiscal with a turnover of around Rs 180,000 crore. However, profit is expected to be the same as last year due to losses on cooking fuels.

The company has borrowed more this year as the issue of oil bonds got delayed from September to this month.

IOC chairman S. Behuria had said the company would sell the bonds to pay off taxes and debt. Behuria said IOC had chalked up a debt of Rs 24,000 crore during the current fiscal.

IOC, which has the highest turnover among all Indian companies, plunged into the red for the first time during the first quarter of the current fiscal with a loss of Rs 54 crore.