PETROLEUM MINISTER HIMSELF EXPOSES THE FALSE CAMPAIGN

Petrol which cost Rs 18.5 per litre by public sector oil companies is being sold at around Rs 52 in Delhi and around Rs 53 to Rs 56 in other parts of the country. The difference between Rs 18.5 to Rs 56 is the tax component plus profit. ONGC is getting a net profit after tax during the last several years.  The profit was Rs 16,768 crore in 2009-10, Rs 16,126 crore in 2008-09 and Rs 16,702 in 2007-08.   This reveals that the so called losses by the oil producing companies is only a story to protect the interest of private sector companies who are making exorbitant amount of profits.  Not only ONGC, the oil refining companies like Indian Oil Corporation are also making very good profit during last many years.  The Indian Oil Corporation has recorded a net profit of more than Rs 10,000 crore in the last year.

The continuing campaign by the central government regarding the losses of petroleum companies and the subsidised oil pricing has once again been found false through the reply given by none other the union petroleum minister in Rajya Sabha recently.

Replying to a question by CPI(M) MP K N Balagopal about the actual cost of production per barrel of crude oil by ONGC – the major public sector oil producing company – on August 3, the minister revealed that the per barrel cost of production is 35.94 US dollars per barrel in 2009-10. That means approximately Rs 1800 for a barrel of 160 litres.  Then the calculation  comes to Rs 11.25 per litre of crude oil.  As per the reply, the selling price of ONGC to public sector oil refining companies is 55.94 US dollars in 2009-10.  That means approximately Rs 2800 per barrel of 160 litres.  Even then it comes to Rs 17.5 per litre of crude oil.  If we add approximately Re 1 per litre of finished product for refining and transporting cost, it will come to only Rs 18.5 per litre of petrol, diesel, kerosene etc.

That means the petrol which cost Rs 18.5 per litre by public sector oil companies is being sold at around Rs 52 in Delhi and around Rs 53 to Rs 56 in other parts of the country.  The difference between Rs 18.5 to Rs 56 is the tax component plus profit.   On the other hand, ONGC is also making good profit from the sales.  The minister in his reply stated that the “ONGC is sharing financial burden of Oil Marketing Companies through discount on Crude Oil prices”.  Even after this discounted pricing, ONGC is getting a net profit after tax during the last several years.  The profit was Rs 16,768 crore in 2009-10, Rs 16,126 crore in 2008-09 and Rs 16,702 in 2007-08.   This reveals that the so called losses by the oil producing companies is only a story to protect the interest of private sector companies who are making exorbitant amount of profits.  Not only ONGC, the oil refining companies like Indian Oil Corporation are also making very good profit during last many years.  The Indian Oil Corporation has recorded a net profit of more than Rs 10,000 crore in the last year.

The per barrel cost of production of crude oil produced by Oil and Natural Gas Corporation (ONGC) during the last five years as per the minister’s reply is:

Year           Cost of production of crude oil (in US $/ Barrel)

2005-06                                          24.11

2006-07                                          27.14

2007-08                                          33.21

2008-09                                          31.21

2009-10 (provisional)                    35.94

The post discount selling price of crude oil supplied by ONGC during last five years:

Year                           Selling Price (US $/ Barrel)

2005-06                                          42.34

2006-07                                          44.22

2007-08                                          52.90

2008-09                                          47.70

2009-10                                          55.94

The net Profit After Tax (PAT) earned by ONGC during last five years:

Year                                  PAT (Rs. in Crore)

2005-06                                         14,431

2006-07                                         15,643

2007-08                                         16,702

2008-09                                         16,126

2009-10                                         16,768

for more reading

• OIL PRICE MANOEUVRES – C P Chandrasekhar
• IS PETRO PRICE HIKE UNAVOIDABLE? -Prof.K.Nageshwar
• THE OIL PRICE HIKE -Jayati Ghosh
• PETRO PRICE HIKE: A CRUEL BLOW
• DEREGULATION OF PETROL PRICES: THE GOVERNMENT DEFENCES
• CALLOUS JUSTIFICATION OF PETRO PRICE HIKE
• NO TO PARIKH REPORT, FIND ALTERNATIVES TO PETRO PRICE HIKE
• PRICING OF PETROLEUM PRODUCTS
• IMPORTANT INITIATIVES IN THE OIL AND GAS SECTOR
• summary of recommendations of kirith  parikh report
• For Full Text of the parliamentary standing  committee  report on pricing of petroleum products  visit www.petroleum.nic.in
• PETROLEUM TAXES: THE UNTOLD STORY – Dipankar Mukherjee
• Pranab rules out rolling back fuel price hike