Cash compensation won’t help for OMCs under-recoveries: Geojit BNP Paribas Financial Services

Gaurang Shah, chief manager, Geojit BNP Paribas Financial Services, in a chat with ET Now talks about cash compensation to OMCs.

What’s the sense about all this talk of cash compensation? Do you think it will change a whole lot the fortune of these companies, which are already bleeding quite a bit?

The whole question mark is what is the percentage of this cash compensation that government has planned to do. Everything said and done, I do not think government can inject that amount of liquidity in these OMCs when they are bleeding left, right and centre.

The only remedy out of these bleeding or under-recoveries is that oil marketing companies have got to possibly put the Parikh Committee report recommendations on fast track for recommendation and take it forward from thereon. Let’s not forget, I mean at $80 also, the oil marketing companies were on a heavy under-recovery and with crude at roundabout $86-87 a barrel, that under-recoveries only grow bigger and bigger and gets ballooned. So from that point of view, yeah, I mean it is a breatherbut Ido not think it is going to do anything great as far as the under-recoveries are concerned.