State-run oil marketing companies (OMCs) avoid hedging their spot purchase of crude oil from the global market as it may work in either ways.
This was mentioned in the recent report of the standing committee on petroleum and natural gas submitted to the Parliament recently.
The report quoted Bharat Petroleum Corporation (BPCL) Chairman as saying that state-run oil firms, which undergo stringent audit by CAG, don’t want to take the risk of hedging. Hedging can work either way. “For example, Reliance lost huge money in hedging, but in our case, we have to take permission from the RBI,” the Chairman is quoted as saying in the report.
The chairman is also quoted as saying that “When they (private firms) hedge, they lose heavily and nobody questions because they have their own company, but when we lose we will be subjected to all kinds of queries and people will be held accountable. Who will going to answer to all these?.”
However, BPCL denied making any specific comment on the business practices or activities of any other oil company, according to a media report.
On its part, RIL also denied having incurred losses on hedging their crude oil purchase.
In order to shield themselves from the volatility in
the international crude oil price, oil firms resort to hedging.
It is learnt that India’s crude oil import in 2012-13 was worth Rs 782,950 crore, which included about 80 per cent long-term contract and 20 per cent spot purchases.
Leave a Reply
You must be logged in to post a comment.