Oil firms ran out of options: IOC's Butola

Indian Oil chairman RS Butola today said that the oil marketing firms ran out of options as under recoveries went through the roof to Rs 8.4 a litre of petrol forcing the companies to resort to a steep price hike.

“We exhausted all options. We also believe it is a high burden,” Butola told at a press conference in New Delhi.[caption id=“attachment_320312” align=“alignleft” width=“380” caption=“Chairman of IOCL, RS Butola. Image courtesy PIB”] [/caption]

“At one point the under recovery came down to Rs 7.17 but it picked again,” he said, adding the pressure on the firms is primarily because of international pricing.

Giving some figures to the extent of loss, the IOC chief said, “The loss faced by IOC due to under recovery was at Rs 1,056 crore while for the industry it was Rs 2,400 crore in 50 days till 23 May.”

“We got a letter two days ago from the government saying we will not be compensated for petrol under recoveries. We are to receive compensation only for diesel and LPG. Due to this we decided to raise prices,” Butola said.

When asked if diesel prices would be raised soon Butola said the oil marketing companies could only change prices of de-regulated products like petrol and ATF.

“Decisions on diesel price would need to be taken by the government,” he said.

Admitting that it was not a ‘pleasurable decision’, Butola said that higher prices also pull down the company’s margins.

“We are consulting experts and we are hoping that prices will come down. If prices come down in future we shall pass on benefits to the consumers as we did in November-December last year,” he said.

The IOC head stressed that the decision of the hike was ‘unfortunate’ and there was no choice as the ‘borrowings went high’.