Hardeep Singh Puri said oil companies moderated prices during extreme volatility to help consumers
Hardeep Singh Puri said oil companies moderated prices during extreme volatility to help consumers
PSU oil companies are losing a net ₹4 per litre on diesel while their margins have turned positive on petrol, Oil Minister Hardeep Singh Puri said on Wednesday on talks of a price reduction in the offing as international rates have softened.
Mr. Puri said his ministry will seek assistance for the three fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – for the losses they incurred on holding petrol and diesel prices since the Ukraine war to help the government fight inflation.
“OMCs [oil marketing companies] still have under-recoveries on diesel,” he told reporters when asked if there is a price reduction in the offing.
The three firms held prices despite international oil prices shooting up to more than a decade high.
The under-recovery – difference between the retail selling price and the international rate – currently is about ₹27 per litre on diesel but the actual cash loss (the loss based on the actual cost of procurement of crude oil and turning it into fuel) is about ₹3-4 per litre.
Mr. Puri said oil companies moderated prices during extreme volatility to help consumers.
The three fuel retailers suffered a net loss of over ₹19,000 crore in the April-June quarter and are expected to report losses for the following quarter as well.
Asked if his ministry will seek financial assistance to make up for the losses, Mr. Puri said, “emphatic yes.” “The question is will you try for it and my answer is yes,” he said, refusing to discuss what relief will be sought. “The government is ceased of the issue.” The government last month doled out ₹22,000 crore to the three firms as a one-time grant to make up for the losses they incurred on selling domestic cooking gas (LPG) in two years starting June 2020.
Mr. Puri’s ministry had sought ₹28,000 crore for the LPG losses but got ₹22,000 crore.
The softening of international oil prices had raised the expectation of a cut in petrol and diesel prices.
The basket of crude oil that India imports had shot up to $116 per barrel in June but has moderated to $92.25 this month.
If the price reduction happens, this will be the first cut since May 22 when the government cut excise duty on the two fuels to shield customers from high global prices and rein in inflation.
Petrol and diesel prices are supposed to be revised daily but state-owned fuel retailers have not exercised their rights since April 6. Rates have been on freeze since then except on May 22 when prices were reduced following a cut in excise duty.
