Feb 27, 2009

PSU OMCs slide as oil boils

26 Feb 2009 | 15:28 PSU OMCs slide as oil boils

Hindustan Petroleum Corporation (down 3.62%), Indian Oil Corporation (down 2.53%), and Bharat Petroleum Corporation (down 4.45%), declined.

US light, sweet crude for April 2009 delivery surged $2.54 or 6.36% to $42.51 a barrel on Wednesday, 25 February 2009 after US government data that showed a larger-than-expected drop in gasoline stocks.

State-run oil marketing firms suffer under-recoveries on domestic sale of petroleum products.

As per report, retail prices of diesel may go down further by Rs 2 a litre soon as the government looks to hike its goodwill quotient among voters before the code of conduct kicks in for the general elections slated for April-May 2009.

However oil ministry is not in favour of reducing prices any more as public sector oil marketing companies (OMCs) are still losing money on the sale of subsidised kerosene and cooking gas.

Oil firms have started making money on the sale of petrol and diesel. As on 18 February 2009, OMCs were earning a profit of 3 paise per litre of petrol and Rs 4.45 per litre of diesel. However, they were losing Rs 11.25 a litre on the sale of kerosene (sold through fair price shops) and Rs 74.53 on every cylinder of cooking gas.

The government slashed fuel prices twice since December 2008. Petrol retail price went down by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 on a 14.2-kg cylinder on 28 January 2008. In December 2008, prices of petrol and diesel were reduced by Rs 5 a litre and Rs 2 a litre, respectively.