The price cut in petrol is the second reduction in rates since October, on account of fall in international oil prices. The last reduction in petrol price before this was the 56-paise cut to Rs 67.90 a litre on October 9. Thereafter, the rate was hiked by 29 paise following government decision to raise the commission paid to petrol pump dealers.
However, unmet under-recoveries for other petroleum products in the first half of FY13 for IOC currently stand at Rs 25,000 crore, said Goyal. Upstream companies continue to compensate oil retailers like IOC by USD 56/bbl.
The company expects to sustain gross refining margins or the difference between crude oil price and total value of petroleum products produced by the refinery at USD 4/bbl
Here is the edited transcript of the interview on CNBC-TV18.
Q: The positive surprise this time around was the higher government and upstream subsidy that you got. Can you give us a sense of when the government will fully compensate OMCs because despite this subsidy that has come in, the losses of Q1 has not been fully compensated we understand? Can you give us more clarity on what you are expecting to see in terms of subsidy going ahead?
A: The government has given the letter for declaring the compensation to oil companies, about Rs 30,000 crore against the total under-recovery of Rs 54,417 crore. Still the oil companies have an unmet under-recovery of Rs 25,000 crore.
Q: Any indication on how exactly this will be fulfilled in the second half? Will it be some of the upstream companies that will be sharing the burden? Will the government pitch in? How will it work?
A: That I cannot say, but the government has taken a decision that upstream companies will be compensating the oil marketing companies at the rate of USD 56 per barrel. That is being compensated by these upstream companies. For the rest of the unmet under-recovery, we have taken up the matter with the Ministry of Petroleum.
They will have to compensate and till date we have not received the cash. We are requesting the Ministry of Petroleum to compensate in cash because our borrowings have already reached Rs 96,000 crore and it is becoming difficult to meet our working capital requirement.
Q: You also cut petrol prices recently. Does that leave you at neutral against petrol in terms of under-recoveries and will you have to hike it again soon given the way crude has started spiking as also the currency has started weakening?
A: We have mentioned in our press conference that petrol prices are at market determined prices. We are changing the prices as per the market trend. If there is an under-recovery on MS, definitely we would like to increase the prices. As on today, we have no under-recovery on MS.
Q: Coming back to the subsidy issue, in your interactions with the government is there any timeline that has been indicated on when the government will fully compensate OMCs? Are you expecting to see it in Q3, Q4 of this financial year?
A: We have not received any timeframe in this regard, but we are taking up the matter with the ministry from time to time to compensate it fully.
Q: Can you give us an update on the Gross Refining Margins (GRM) improvement that we saw this time around? It has improved to about USD 5.2 per barrel. What kind of trajectory are you hoping to see in terms of GRM as we head into the end of the year?
A: We have mentioned that USD 5.15 per barrel is the GRM for Q2, but half yearly it is only USD 0.14 per metric tonne because in Q1 we have a negative GRM of USD 4.81 per barrel. But, we hope that now the cracks are good and we will be able to maintain the GRM between USD 3-4 per barrel.
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Under-recoveries of Rs 25K cr pending in April-Sept: IOC
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