Delay in the receipt of compensation from the government may cause the oil marketing companies (OMCs) to post losses during the September 2012 quarter, reports suggest.
Government, which reimburses the OMCs for selling diesel, PDS kerosene and cooking gas at subsidised prices, has delayed release of funds. While some part of the subsidy burden is borne by upstream oil firms lik ONGC, the larger share is made good by the government.
Failure to get payment from government resulted in the three oil marketers posting an unprecedented net loss of Rs 40,536 crore in the June 2012 quarter.
A small part of their losses is made good by discounts from upstream PSUs like ONGC, Gail and Oil India. Petroleum planning and analysis cell (PPAC) under the petroleum ministry calculates the industry’s under-recoveries.
The losses in the April-June quarter were sufficient to erode over 45 percent of the combined net worth of the three oil companies. A similar loss in September quarter would take them very close to the cliff where the net worth turns negative — a situation where their liabilities exceed their assets, which characterizes bankrupt companies.
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