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Refiners to reap benefits of fuel price hike only in Q2

15 Jul 2011 Evaluate

The trio of Indian Oil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation will have to wait till the second quarter of this fiscal to reap the benefits of the recent fuel price hike. The Centre had increased prices of diesel, cooking gas and kerosene in end-June along with some duty cuts. However, this has hardly helped the oil companies' cause for the first quarter when combined net losses are projected to be nearly Rs 20,000 crore.  the losses incurred on diesel, cooking gas and kerosene (as a result of subsidies) for the April-June period were nearly Rs 35,000 crore.

Eventually, the three refiners are tipped to post net losses of Rs 18,000 crore, of which, IOC would account for over half this figure with BPCL and HPCL taking up the balance. However, the good news is that Q2 will see these fuel losses down by nearly 60 per cent as a result of the price hikes.

Current estimates are that they would be in the region of Rs 15,000 crore (against Rs 35,000 crore in April-June) of which the upstream trio will bear Rs 5,000 crore as part of the subsidy-sharing formula. As has been the case in the past, the Finance Ministry will end up settling a large part of the dues with IOC, HPCL and BPCL

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