Crude flight puts brakes on ONGC's retail plans
As global oil prices continue to soar, state-owned ONGC has put its plans for a retail rollout on the backburner.
By Chandra R Srikanth, |
KUMBAKONAM: As global oil prices continue to soar, state-owned ONGC has put its plans for a retail rollout on the backburner. ONGC, together with MRPL, has a licence to open 1,600 fuel stations under the brand OVal. ���We opened just one for the brand���s sake, but the retail plans are on the backburner.
With the crude oil prices soaring, we would incur losses by opening more outlets,��� said ONGC chairman and managing director RS Sharma after inaugurating the company���s helium-extraction plant at Kuthalam in Tamil Nadu. Mr Sharma���s comment comes on the back of RIL closing down its fuel stations to offset the rising losses.
Opening fuel stations is not commercially viable because the government compensates only oil marketing firms such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum for under-recoveries. Under-recoveries are the losses incurred by oil companies for selling fuel at subsidised prices.
ONGC muscled its way into oil retailing by picking up stake in Mangalore Refineries and Petrochemicals in 2002. While ONGC had 1,100 licences, its subsidiary MRPL had 500. Currently, it operates only one retail outlet near Mangalore.
���I do not expect (oil) prices to come down. The supply is not able to keep pace with demand. Therefore, prices are under tremendous pressure,��� Mr Sharma said.
The Indian crude basket has touched $117 a barrel and at this rate the under-recoveries from sale of petroleum products could touch an exorbitant sum of Rs 1.8 lakh crore for FY09, he said. The under-recoveries went up from Rs 54,000 crore in FY07 and is expected to be close to Rs 76,000 crore for FY08.
Though global crude oil prices have touched $126 per barrel, India sells fuel at subsidised rates. The loss in the process is borne by upstream companies such as ONGC and OIL, refining companies IOC, BPCL, HPCL and the government.
Mr Sharma did not comment on the company���s plans for the 15-mtpa Kakinada refinery where it has a 26% stake. ���All I can say is, we would come out with a definitive statement (on the project) in a couple of weeks.
A project of this magnitude cannot happen without tie-ups.��� Recent media reports suggested that Reliance, Essar and the Hindujas had evinced interest in picking up stake in the Rs 31,000-crore project.
With the crude oil prices soaring, we would incur losses by opening more outlets,��� said ONGC chairman and managing director RS Sharma after inaugurating the company���s helium-extraction plant at Kuthalam in Tamil Nadu. Mr Sharma���s comment comes on the back of RIL closing down its fuel stations to offset the rising losses.
Opening fuel stations is not commercially viable because the government compensates only oil marketing firms such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum for under-recoveries. Under-recoveries are the losses incurred by oil companies for selling fuel at subsidised prices.
ONGC muscled its way into oil retailing by picking up stake in Mangalore Refineries and Petrochemicals in 2002. While ONGC had 1,100 licences, its subsidiary MRPL had 500. Currently, it operates only one retail outlet near Mangalore.
���I do not expect (oil) prices to come down. The supply is not able to keep pace with demand. Therefore, prices are under tremendous pressure,��� Mr Sharma said.
The Indian crude basket has touched $117 a barrel and at this rate the under-recoveries from sale of petroleum products could touch an exorbitant sum of Rs 1.8 lakh crore for FY09, he said. The under-recoveries went up from Rs 54,000 crore in FY07 and is expected to be close to Rs 76,000 crore for FY08.
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Though global crude oil prices have touched $126 per barrel, India sells fuel at subsidised rates. The loss in the process is borne by upstream companies such as ONGC and OIL, refining companies IOC, BPCL, HPCL and the government.
Mr Sharma did not comment on the company���s plans for the 15-mtpa Kakinada refinery where it has a 26% stake. ���All I can say is, we would come out with a definitive statement (on the project) in a couple of weeks.
A project of this magnitude cannot happen without tie-ups.��� Recent media reports suggested that Reliance, Essar and the Hindujas had evinced interest in picking up stake in the Rs 31,000-crore project.
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