State-run oil marketing firm, Bharat Petroleum Corp Ltd (BPCL) has reported a net loss of 88.4 billion rupees during the first quarter of the financial year till June 2012.

The oil company posted huge net loss due to foreign exchange losses and by selling petroleum products below costs. The company received government subsidy, but it is not enough to compensate for the entire losses suffered.

Other oil companies including, Indian Oil Corp (IOC) and Hindustan Petroleum Corp (HPCL) also suffered huge losses during the quarter and are now looking to increase the price of fuel in the market. The three major companies have together suffered a loss of 405.4 billion rupees during the first quarter of the year. HPCL posted a net loss of 92.5 billion rupees, while IOC reported a quarterly loss of 224.5 billion rupees.

State run oil companies, who are suffering a loss of about Rs. 1 on every liter of petrol sold in the country, now believe that the government should either let them increase the price of the fuel or switch back to the regulated pricing mechanism.

The oil companies are now spending more to pay for imports in dollars and thus might have to increase the retail prices in the country. Even as the oil companies are free to determine the price, they still have to take `advise' from the petroleum ministry before announcing any changes to the retail prices in the country. The oil companies will only roll out an increase after taking the government's consent on the matter.