Myth of Petroleum Under Recoveries in India
For almost nearly 5-6 years, prices of petroleum products have been sky rocketing. International prices of crude oil has increased from avg of 79.25 $/bbl in 2007-08 to avg of 107.97 $/bbl in 2012-13. Accordingly prices of petroleum products have been increasing in India. Accordingly under recoveries of Oil Marketing Companies have increased from Rs 77,123 crores in 2007-08 to Rs 161,029 crores in 2012-13. But what is missing from this under recovery debate is that these OMCs are just one part of the supply chain of petroleum products. At present the three OMCs - IOCL, BPCL and HPCL handle almost all of the distribution of petroleum products in the country. Even if you take suggestion of CAG into account, these companies are alive only due to govt subsidies and support of upstream players. ONGC is the govt arm in exploration and production of petroleum products. When petroleum prices increases, its profit increases unlike OMCs. Its profit after ta...