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| World Home » Current Affairs » | Fri. May 16, 2008 |
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Govt playing with fire to sell fuel at low cost MIL/Bloomberg Input/Agencies, Apr 14, 2008. IR Summary New Delhi, India: April 14, 2008 – IR Summary - The Govt. is creating an alarming situation for Indian Oil Corporation to help control the inflation. The UPA Govt. wants to woo the future voters for upcoming elections. It is not only a wrong policy chalked out by the Govt, in fact the Govt.is playing with fire. Their own feet may burn by their own strategy. Without considering pros and cons, it is forcing IOC to sell fuel below cost, and if this continues, the economy shall severely hit and may become uncontrollable since daily losses, as per statistisc come between 1.8 billion and 3.2 rupees. The refiner is losing 3.2 billion rupees ($80 million) a day selling fuels below cost and may not be able to even to meet routine expenses and this figure is confirmed by Chairman Sarthak Behuria, who gave his feelings in New Delhi. Bloomberg Input: India caps retail fuel prices to control inflation and raised them in February for the first time since June 2006 even as oil rose 57 percent last year. The increase was aimed at easing the strain on the finances of refiners, which get bonds as partial compensation for the losses. Refiners will get 234.6 billion rupees of bonds for the year that ended March 31, Priya Ranjan Dasmunsi, parliamentary affairs minister, said on Oct. 11. They received 241.2 billion rupees of bonds in the previous fiscal year. The bonds aren't enough to compensate refiners, Behuria said. Indian Oil sells the bonds at a 9 to 10 percent discount, he said. Borrowings by the refiner are expected to rise to as much as 30 billion rupees a month, the chairman said. The company's debt as of March 31 stood at 340 billion rupees, he said. That exceeds the 320 billion rupees estimated by the company in January. Crude oil prices may remain high this year on supply constraints, Behuria said. More:
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