Revenue losses on petrol sales now stand at about Rs 3 a litre compared to about Rs 0.41 a litre in the fortnight ending August 31 due to the increase ins spot prices of the fuel, he said.

Government last hiked petrol prices in mid-may by Rs 5 a litre.

Earnings at state-run refiners and retailers depend to a large extent on government subsidy as they are required to sell diesel and cooking fuels at government-set prices. State-owned oil companies get subsidies from the government and discount on crude products to partly offset the losses. But losses are too wide, which cannot be wholly offset by discount and subsidies.

The company which controls about a third of the 4.17 million barrels per day capacity, reported a loss in its first quarter results of Rs 3,719 crore in the three months through June, compared with a net loss of Rs 3,388 crore a year earlier. The government provided compensation worth Rs 8,200 crore to IOC for selling cooking and auto fuel at discounted prices.

Indian Oil's earnings were also hurt by an 82% surge in interest cost to 10.38 billion rupees. Besides, it took an inventory loss due to changes in customs duties.

IOC's total borrowings are at about Rs 710 billion and this could rise to about Rs 900 billion by December if it did not get cash compensation from the government.

The company plans to raise debt, which may be a mix of local and foreign loans, by the end of this fiscal year.

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