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OMCs face further margin erosion on petrol

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 10, 2012 03:50 hrs

pOil marketing companies OMCs&rsquo margin of over Rs 2 on every litre of petrol has been eroded in the current fortnight due to a spike in the international petrol price and a weaker rupeeppThe margins were down to near-negligible in the current fortnight though they were healthy even after the companies took a price cut of Rs 095 a litre on November 15ppOMCs review petrol prices in tune with the international price on a fortnightly basisppThe average international price hardened from 11374 a barrel during the first fortnight of November to 11864 in the second one The dollar-rupee exchange has moved from Rs 5424 to Rs 5521 between the two periodsbr br table cellpadding2 width403 tbody tr styleheight 15pt height20 td styleheight 15pt width388 bgcolorccd7dd colspan3 height20strongfont size2CRUDE OIL CHARTfontstrongtd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolor95acb3 height20strongfont colorffffff size1Price build-up of petrol in Delhifontstrongtd td alignright width68 bgcolor95acb3strongfont colorffffff size1Effectivebr Nov 16&rsquo12fontstrongtd td alignright width60 bgcolor95acb3strongfont colorffffff size1Effectivebr Dec 1&rsquo12fontstrongtd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1C&F price of petrol barrelfonttd td alignright width68 bgcolorccd7ddfont size111374fonttd td alignright width60 bgcolorccd7ddfont size111864fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Average exchange rate Rs fonttd td alignright width68 bgcolorccd7ddfont size15424fonttd td alignright width60 bgcolorccd7ddfont size15521fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Price paid by OMCs to refineries Rs litrefonttd td alignright width68 bgcolorccd7ddfont size13965fonttd td alignright width60 bgcolorccd7ddfont size14211fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Price charged to dealers Rs litrefonttd td alignright width68 bgcolorccd7ddfont size14503fonttd td alignright width60 bgcolorccd7ddfont size14503fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Excise duty+cess Rs litrefonttd td alignright width68 bgcolorccd7ddfont size1948fonttd td alignright width60 bgcolorccd7ddfont size1948fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Dealer commission Rs litrefonttd td alignright width68 bgcolorccd7ddfont size1179fonttd td alignright width60 bgcolorccd7ddfont size1179fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1VAT Rs litrefonttd td alignright width68 bgcolorccd7ddfont size11094fonttd td alignright width60 bgcolorccd7ddfont size11094fonttd tr tr styleheight 15pt height20 td styleheight 15pt width251 bgcolorccd7dd height20font size1 fontfont size1Retail price Rs litrefonttd td alignright width68 bgcolorccd7ddfont size16724fonttd td alignright width60 bgcolorccd7ddfont size16724fonttd tr tr styleheight 15pt height20 td styleheight 15pt width388 bgcolor95acb3 colspan3 height20emfont colorffffff size1Source Indian Oilfontemtd tr tbodytableppEvery dollar decline in global petrol improves margins by Rs 034 on every litre of petrol every Rs 1 strengthening against the dollar has a positive impact of Rs 074 on a litre Accordingly the refinery transfer price or the price paid by OMCs to refineries for petrol increased from Rs 3965 in the first fortnight to Rs 4211 a litre in the nextpp&ldquoAs things stand a price hike is unlikely soon as the winter session of Parliament is on till December 20&rdquo said a company officialppPetrol was decontrolled in June 2010 but the government-owned OMCs failed to pass on regular desired increases due to political pressureppConsequently they have not made any profit on petrol in the two financial years following the decontrol The trend does not look different in the current year tooppThe three OMCs &mdash Indian Oil Bharat Petroleum and Hindustan Petroleum &mdash together lost Rs 2300 crore on petrol in the first year of decontrolppThe loss expanded to Rs 4890 crore during 2011-12 In the first two quarters of the current financial year they have already incurred a loss of Rs 2600 crore on sale of petrol due to their inability to change retail selling prices to match market conditionsppIOC the biggest of the three had also pleaded with government to move petrol back to a controlled regime so that the loss gets compensated by the government as happens with diesel kerosene and domestic cooking gas all of which are sold at prices decided by the petroleum ministryppHowever the OMCs are also suffering under-recovery on sale of the latter three productsppThe projected under-recovery on these three is expected to cross Rs 160000 crore for the current year against Rs 138541 crore in 2011-12p


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