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Puzzle of OMCs


A Perspective

I have NEVER EVER understood how can these Oil Marketing Companies (OMCs) like IOC make such terrible losses. For a public sector company to loose $4billion - Rs22,450Crs - on a quarter - of TAXPAYER's money is absolutely terrible.

Simply put, for the 110 Crore citizens of India, IOC just lost Rs204 for each and everyone of us! Thats Rs250 crores per day!!

I agree there is a lot of subsidy burden on the company and that is something that has to be unfortunately socialised. Fine. But what makes you sure that all of the above losses are purely based on subsidies?

Is it possible that their procurement programs are not efficient? Or is it possible that they can increase production efficiency in their refineries? Or is it possible that there are thefts, spliiage and loss of their inventories? 

How is it that their biggest ever loss comes at a time when oil is heading down? Agreed, they may have booked it forward. So does that mean going by the lower oil prices in current quarter IOC or other OMCs will show a good / stellar results in next quarter? Or will they still blame the crude prices, fluctuations, USDINRs etc.

Are we all to make payments and backstop a public companies' inefficiencies? Do we even question how these companies are being run?


I accept these guys are having a terrible time. But if these guys are have such horrible revenue slippages when USDINR is at 55-56 and oil at $85-95, how under the heaven will they react in the extremes of $200 oil or USDINR at 80?

Importantly, are they learning anything? Are they contracting for lower cheaper oil? Are they working on efficiency of their plants, transportations and inventories? Or is all our money going waste?

I am not even touching upon the subject of under-recoveries (yes, that voodoo thing!)

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