Government-owned oil marketing companies are still losing around INR 600 crore a day despite the increase in petrol and diesel prices announced on May 25
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NEW DELHI — Government-owned oil marketing companies -- Indian Oil, Hindustan Petroleum and Bharat Petroleum -- are still losing around INR 600 crore a day despite the increase in petrol and diesel prices announced on May 25, a senior government official said on Monday.
This is the fourth increase in the prices of the two fuels over the last 10 days. The oil companies raised the price of petrol by INR 2.61 a litre and that of diesel by INR 2.71 per litre. The increase takes the cumulative rise in petrol and diesel prices to nearly INR 7.50 a litre after daily revisions resumed following a prolonged freeze.
"If you look at the global level, the price increase is in the range of 22 per cent for motor spirit (petrol) and 27 per cent for high-speed diesel (HSD)," Joint Secretary in the Ministry of Petroleum, Sujata Sharma, said.
"But in India, the hike is much less. For petrol, it is 7.7 per cent and 8.6 per cent for HSD. But before increasing the prices, the government undertook all the possible measures. The government has reduced excise duty on petrol and diesel by INR 10 per litre, resulting in a revenue impact of INR 14,000 crore," she said.
Even after taking all these steps, the oil companies were piling up losses of INR 1,000 crore a day. "After the price rise, it has reduced, but it is still slightly less than INR 600 crore per day," she pointed out.
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Despite the latest hike in retail prices of auto fuels, the under-recoveries of oil marketing companies remain stubbornly high due to increasing losses in domestic LPG sales and high crude prices, ICRA Senior Vice President and co-group head, corporate ratings, Prashant Vasisht, said.
The average price at which refiners import oil increased to $107.84 in May against $69.01 in February before the war broke out, data compiled by the Ministry’s Petroleum Planning and Analysis Cell showed.
The benchmark Brent crude remained volatile in April, as the Iran war raged. It dropped to around $90 a barrel on April 17 after a temporary ceasefire was announced, but hit $126.41 a barrel on April 30 on fears of renewed hostilities. The monthly average works out to around $117 a barrel.
Retail petrol and diesel prices in India have remained largely unchanged since early April 2022, which reduced the profit margins of the public sector oil companies.
Meeting domestic market requirements remains a priority for the government, and the oil companies will continue to source crude, which is technically and commercially fitting for their refineries, Sharma added.