Some cheer for oil firms, finally
Thursday, August 7th, 2008Crude oil prices, which have fallen by a fifth after touching a peak of $147 per barrel on July 11, is not only likely to provide relief for oil marketing companies but also result in substantial savings in country’s import bill by as much as $20 billion, if the prices stay at the current level.
For the three public sector firms- Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)- the sharp drop in oil prices would mean corresponding reduction in loss for the petroleum products they sell below the production cost and more cash in hand to smoothly run their day-to-day operations.
At the current price level of US$116.9 per barrel for the Indian basket of crude oil, the under-realization loss for oil marketing companies is pegged at Rs180,000 crore for the financial year ending March 2008, around 25 per cent lower than the estimate when the price of oil nearly touched US$142 per barrel.