Oil corporations lose around Rs 3 per litre on diesel, while their profit margins shrink on gasoline

Oil corporations lose around Rs 3 per litre on diesel, while their profit margins shrink on gasoline

Oil corporations lose around Rs 3 per litre on diesel, while their profit margins shrink on gasoline

Due to India's 85% reliance on imports for its oil requirements, local rates are benchmarked to the strength of international oil prices, which saw a decline in the latter part of 2018 before rebounding in the latter part of January. went.

Due to the recent increase in global oil prices, state-owned fuel merchants are losing around Rs 3 per liter when selling diesel, while their earnings from selling gasoline have decreased. Industry representatives are urging the continuation of retail pricing. describing in full the stated reasons.

Ninety per cent of India's fuel market is controlled by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), as well as Hindustan Petroleum Corporation Limited (HPCL). These companies have 'voluntarily' ceased supplying gasoline, diesel, and cooking gas (LPG). The pricing are the same as before. It has lost money when input costs were high and made money when raw material prices were low over the last roughly two years.

Due to India's 85% reliance on imports for its oil requirements, local rates are benchmarked to the strength of international oil prices, which saw a decline in the latter part of 2018 before rebounding in the latter part of January. went.

He has rejected requests to lower rates for consumers and go back to daily price adjustments on the grounds that prices are still quite volatile, climbing one day and decreasing the next, and that customers have already made up all of their losses. There has been no payment.

"Diesel is losing money," a representative of the sector said. "Though it had improved, oil companies are now losing about Rs 3 per litre." According to him, the profit margin on gasoline has decreased to around Rs 3–4 per liter.

When asked about the change of gasoline prices, Oil Minister Hardeep Singh Puri told reporters outside India Energy Week that oil firms make their judgments after taking all economic factors into account. The government does not set pricing.

"They claim that market volatility is still present," he said.

In response to a question on the three firms' staggering Rs 69,000 crore in profits over the first nine months of the current fiscal year, he said that price revision is anticipated to begin if the same pattern persists in the fourth and final quarter of the current fiscal year. Will go. March 31, please.

He said that even if oil prices were increasing, "they suffered losses when they voluntarily decided not to raise prices."

According to regulatory filings by IOC, BPCL, and HPCL, their total net profit for the first nine months for the current financial year, from April to December, was more than their yearly profits of Rs 39,356 crore in the year prior to the oil crisis.

During April-September 2022, the firms disclosed a total net loss of Rs 21,201.18 crore, compared to the Rs 22,000 crore declared but underpaid LPG subsidy in the previous two years. The government's LPG subsidy and subsequent softening of global prices enabled IOC and BPCL to post yearly profits for the 2022–2023 fiscal year (April 2022–March 2023), but HPCL continued to lose money.

This fiscal year has seen a significant shift in circumstances. In the first two quarters (April–June and July–September), when local rates are benchmarked to international oil prices, which practically halved from a year earlier to US$72 a barrel, all three businesses recorded record quarterly profits. Vanished. The next quarter, international prices increased once again to US$90, which decreased their profitability.

However, they earned a large profit all year long.

For the week ending June 24, 2022, there was a loss of Rs 17.4 per litre of petrol and Rs 27.7 per litre of diesel due to the fuel price freeze that started on April 6, 2022. But then there was softening, which wiped away the losses. All three businesses made a profit of Rs. 11 on gasoline and Rs. 6 on diesel last month.

However, according to another industry source, things have recently altered.

The price of oil has fluctuated significantly on a global scale in recent years. after the epidemic began in 2020, it fell into negative territory. However, it recovered dramatically in 2022, reaching a 14-year high of almost US$140 per US dollar after Russia invaded Ukraine in March of that year as a result of poor demand from China, the country's main importer. arrived at the barrel. as well as worries about a slowdown in the economy.

However, an increase might worsen already high inflation rates and stall the nation's economic recovery from the epidemic since it is 85% import-dependent.

For the longest time in the previous 20 years, the three fuel sellers were able to maintain constant rates for gasoline and diesel. When rates nationwide hit an all-time high in early November 2021, he stopped daily price adjustments. This led the government to reverse part of the excise tax boost it had implemented during the epidemic in order to capitalize on the drop in oil prices. Had to accept.

The embargo lasted until 2022, but before another excise tax drop occurred in mid-March 2022, the price of gasoline and diesel increased by Rs 10 per liter due to a war-related spike in global oil prices.During this period, the tax on gasoline and diesel was raised by Rs 16 per liter in the second round, with all prices of Rs 13 per liter and Rs.

Following this, on April 6, 2022, the present price stabilization began, and it is currently ongoing.