Even though state-run oil marketing companies (OMCs) announced profit during the quarter ending December 31, 2012, they posted losses on a nine-month period between Apr-Dec 2012.
This is because the government did not make timely payment of subsidy amount to these firms (in the Apr-Jun 2012 and Jul-Sep 2012 quarters) for the under-recovery incurred through selling fuel at below market rates. These OMCs are expected to receive full compensation for the under-recoveries towards the end of March 2013.
Recently, these firms received an assurance letter from the government towards the compensation for the October-December 2012 quarter.
The cash would be paid only after Parliament approves supplementary budget expenditure. This means the ground reality for these companies doesn't change much as the problems related to working capital crunch, high debt and interest burden would continue, reports indicate.
The three OMCs - IndianOil, BPCL and HPCL - received adequate compensation from the government and upstream companies to cover their losses, unlike the inadequate compensation of the earlier two quarters.