The implementation of proposed export-parity pricing (EPP) for calculating subsidy will be disastrous for refiners, analysts believe.
Government-backed Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) sell refined products like diesel at controlled prices. Therefore, their profitability numbers are generally notional unless the government compensates them via subsidy.
Gross refining margins, which determine the refiners' profitability, will get completely wiped off in case the government implements the EPP for calculating subsidy.
The rates of Brent crude have gone down by $110 per barrel. The rates have been lowed with aim of boosting the demand of the crude in the global market. Recession and financial turmoil are being faced by many countries.
Because of growing debts, many countries have already lowered their crude consumption. Spain and Greece have been coming up with austerity plans to deal with the debts. However, recent anti-austerity campaign has put the county at tough position. If the austerity plans are put forth timely then the debt crisis of 2007 will again be experienced by the country.
Earlier this morning, there was news from the central bank of Japan stating that due to the slowing down of the global economy, very soon it would be introducing more of spur into its country, so that it could boost its asset purchases. Following this, there were hopes that other central banks might do the same thing. As a result, the oil risen.
After a period of six weeks, this is for the first time that the price of oil has been noted down at such a low value. Reason seems to be Spain’s finances that have actually raised worries while executing out gains in European and Asian markets.
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