Oil under-recoveries likely to drop by over 50% in two years: Crisil

Jun 10 2014, 10:09 IST
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SummaryUnder-recoveries on sale of petroleum products are expected to fall over 50% over the next two years because of efforts to move towards market-linked diesel prices and the expected decline in crude prices.

Under-recoveries on sale of petroleum products are expected to fall over 50% over the next two years because of efforts to move towards market-linked diesel prices and the expected decline in crude prices.

As a result, PAT at downstream companies may rise by Rs 3,300 crore to Rs 3,600 crore y-o-y in 2014-15 and by another Rs 700 crore to Rs 1,000 crore in 2015-16.

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"This will have a significant positive impact on both upstream and downstream public sector oil companies," said ratings agency Crisil. "Upstream companies, will see a sharper improvement of Rs 10,500 crore to Rs 12,000 crore year on year in PAT in 2014-15 and a further improvement of Rs 7,000 crore to Rs 7,500 crore in 2015-16.

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