For the last 15 months, the three retailers have not revised the prices of petrol and diesel commensurate with the cost.
New Delhi:
A report says that oil companies are selling petrol at a profit of Rs 10 per liter but retail prices have not been reduced as they are recovering past losses and making a loss of Rs 6.5 per liter on diesel. Huh.
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) have not revised the prices of petrol and diesel in line with cost for the last 15 months. They have had time for low oil prices to recoup losses incurred when rates were high.
“After record high losses of Rs 17.4 per liter on petrol and Rs 27.7 per liter on diesel for the week ending June 24, 2022, margins for petrol are expected to turn positive by Rs 10 per liter for Q3 (Oct-Dec 2022) While the diesel loss is estimated, ICICI Securities said in a report, potentially narrowing to Rs 6.5 per liter for the same quarter as well.
The three fuel retailers have not changed petrol and diesel prices since April 6, 2022, with crude prices falling from USD 102.97 a barrel that month to USD 116.01 in June and to USD 78.09 this month.
When the holding price was higher than the input cost retail selling price, all the three firms suffered net earning losses. They posted a combined net loss of Rs 21,201.18 crore during April-September despite declaring Rs 22,000 crore as non-payment of LPG subsidy.
“Coupled with gross refining margins (GRMs) of $10.5-12.4 per barrel (net of windfall taxes and estimated inventory losses), we believe operating income for the three companies is likely to be in the black following the record losses seen in the second quarter.” ICICI Securities said.
It estimated earnings before interest, tax, depreciation and amortization (EBITDA) at Rs 2,400 crore for IOC, Rs 1,800 crore for BPCL and Rs 800 crore for HPCL in the October-December quarter.
But they may have a net loss. IOC may incur a loss of Rs 1,300 crore, while HPCL may incur a loss of Rs 600 crore. BPCL can break even.
International oil prices have been turbulent over the past few years. It fell into negative territory in 2020 at the start of the pandemic and swung wildly in 2022 – before sliding on weak demand from top importers to around USD 140 a barrel in March 2022 after Russia invaded Ukraine. climbed to year’s high. China and the worry of economic contraction.
But for a nation that is 85 per cent dependent on imports, the spike means adding to already rising inflation and derailing the economic recovery from the pandemic.
Hence, the three fuel retailers, which control nearly 90 per cent of the market, slashed petrol and diesel prices for the longest period in at least two decades. They stopped the daily price revision in early November 2021, when rates across the country hit an all-time high, prompting the government to roll back a portion of excise duty hikes during the pandemic to take advantage of lower oil prices. Inspired to
The freeze continued into 2022, but a war-led spike in international oil prices saw petrol and diesel prices hiked by Rs 10 a liter from mid-March, before another round of excise duty cuts by all but Rs 13. 16 per liter and came back Rs. Per liter increase in taxes on petrol and diesel with effect during the pandemic.
Thereafter the current price stabilized starting from 6th April and is still continuing.
The oil ministry is pushing for compensation for the losses suffered by the three retailers.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
featured video of the day
Inflation down to 6%, industrial production contracts to 4%