India's state-run oil marketing firms losing 271 crore a day

India’s state-run oil marketing firms Indian Oil, Bharat Petroleum and Hindustan Petroleum, are incurring losses totalling Rs271 crore (US$52.1 million) a day, according to Petroleum Minister Jaipal Reddy. He said their total “under-recoveries” will probably amount to Rs121,000 crore (US$23,278 million) this fiscal year, compared to Rs78,000 crore (US$15,005 million) in 2010-11. The three companies are losing Rs6.90 (US$0.13) on every liter of diesel; Rs24.63 (US$0.47) for a liter of kerosene and Rs270 (US$5.18) for a domestic LPG cylinder. From 2009-2010, the average price of the Indian basket of crude oil was US$69.76 per barrel, but the price has shot up to US$111. Reddy said, “To minimise the burden of rise in international prices on consumers, the government has eliminated the customs duty on crude oil and reduced customs duty on petroleum products by five per cent. The excise duty on diesel fuel has also been reduced by Rs2.60 (US$0.04) per liter.” The government has already exhausted the Rs23,640 crore (US$4,547 million) petroleum subsidy for this financial year by paying the subsidy for the last financial year. Gross domestic product growth is expected to be lower than 9% and it is expected that new provisions for oil subsidy will affect the fiscal deficit target which has been set at 4.6% of GDP. (October 11, 2011)