In a bid to protect public sector oil companies as well as natural gas production companies from heavy losses, the Government of India has asked Oil Marketing Companies (OMCs) not to open more retail outlets until further directions are sent. The government in this regard, however, has not sent any official direction to the companies but advised the OMCs to hold their plan of expanding outlets till further direction.
The public sector oil companies: Indian Oil Company (IOL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), in this reference are considering to slow down the speed of opening new retail outlets, but they are firm to complete the running projects which are either under construction or site has been decided to open it.
At present, IOC, the biggest public sector oil company has approximately 17,000 retail outlets, BPCL 8,500 and HPCL nearly 8,400 outlets.
The Liquefied Petroleum Gas (LPG) companies Indane, Hindustan Petroleum (HP) and Bharat Gas have also received similar direction from Union Petroleum Ministry to not to offer any connection and to open new retail outlets.
The major petroleum private player Reliance Petroleum Limited has recently shut down 900 retail outlets due to anguish heavy loss.
The Petroleum Ministry does not provide support of any kind to private players in their losses while it issues oil bonds for the public sector companies to heal them up to some extent.
At present, the OMCs are losing Rs 715 crore a day that would translate into estimated revenue loss of Rs 2,11,400 crore in 2008-09.
However, the Petroleum Ministry in May has raised the price of fuels: Petrol by Rs. 5 a litre, diesel by Rs. 3 per litre and LPG cylinder by Rs. 50 per domestic cylinder but still oil companies are losing Rs. 14.92 on a litre of petrol, Rs. 24.90 on diesel, Rs. 38.09 on kerosene oil, whose rate was not hiked and Rs. 338.53 on a cylinder of LPG.
The international rising prices of crude oil have shaken the budget of most of the countries and India is one of them. Presently, its prices have soften to USD 136 per barrel from ever high USD 147 per barrel due to Saudi Arabia’s, (the biggest oil producer) announcement of enhancing the productivity of oil. Other oil producing nations are still not ready to hike the crude oil production.
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