(This story originally appeared in on Jul 03, 2014)

NEW DELHI: The public sector oil marketing companies (OMCs) are making profits by selling oil and petroleum products to consumers, contrary to the perception that they are selling oil at a loss. The gain, which could easily have been passed on to retail consumers, has been estimated to be around Rs 50,000 crore in five years between 2007 and 2012.This has been the findings of the Comptroller and Auditor General CAG ) in its latest audit report on pricing of petroleum products. The report has already been submitted to the government and likely to be tabled in Parliament in the forthcoming budget session.The estimated gain to the government is at least Rs 25,000 crore in profits through the sales at petrol pump prices and another gain of similar amount by way of customs duty and other charges added to the sale price of petrol and diesel.On contrary, the OMCs have been reporting "under recoveries" to the tune of over Rs 1.10 lakh crore every year. The government auditor has observed that all these projected losses are notional due to flawed petroleum pricing. The CAG report is believed to have listed reasons how state-owned oil companies adopted a pricing formula that resulted in windfall gains to them and even some private refiners.Sources said the CAG, in its report on pricing of petroleum products, has summarised that the public sector oil companies - Indian Oil HPCL and BPCL — have made profits of over Rs 25,000 crore by selling oil to consumers and at least Rs 25,000 crore more have been added to the petrol pump prices due to levies and other charges imposed. The profit indicated is for the period between April 2007 and March 2012.The federal auditor has disputed the under-recovery stories of these public sector OMCs and explained in detail how these could have been avoided to give relief to the consumers. The findings are based on a thorough scrutiny of accounts of IOC , HPCL and BPCL.In January 2013, the government had authorised these OMCs to increase retail prices of diesel at Rs 0.50 every month to close the gap on their under-recoveries. While the petrol prices have fully been deregulated, the OMCs claim their under-recoveries for 2014-15 for subsidised LPG, kerosene and diesel may exceed Rs 1.07 lakh crore.On Monday, OMCs increased both petrol and diesel prices. A statement from IOC said despite increase of Rs 0.50 on retail diesel prices, the under recoveries remained to the extent of Rs 3.40 per litre.The auditor has finalised at least 15 audit reports and submitted to the government for their tabling in Parliament in the coming session. Important among them are performance audit report on public private- partnership projects in Railways and a compliance audit report on Air Force and Navy. Post a comment