Fuel retailers losing Rs20/litre on petrol, Rs100 on diesel as Iran war drags on

E-PaperSubscribeSubscribeEnjoy unlimited accessSubscribe Now! Get features like New Delhi : Fuel retailers are losing ₹20 per litre on petrol and ₹100 a litre on diesel as state-run firms continue to shield consumers from oil price volatility by holding pump rates, an oil ministry official said on Thursday. A petrol pump attendant picks up a nozzle to refuel a vehicle at an Indian Oil fuel station (AFP)Sector experts and industry executives, speaking on condition of anonymity, said such volatility could be unsustainable for oil refiners if the West Asia crisis prolongs and international oil prices remain above $70-80 a barrel. They expect oil companies to partially pass on their revenue losses on petrol and diesel to consumers sometime after assembly elections – the last round of voting in the ongoing state polls is on April 29 — if international oil price volatility continues. Benchmark crude oil Brent, which was at $72.87 a barrel before the war in West Asia broke out, surged by nearly 40% to $101.91 a barrel on Wednesday. It was hovering over $103 on Thursday. Also Read | Trump says Israel-Lebanon ceasefire extended by three weeks Refuting a news item published on social media that petrol and diesel rates could be raised by ₹25-28 a litre after the assembly election, the petroleum ministry said: “It is hereby clarified that there is no such proposal under consideration by the Government.” “Such news items are designed to create fear and panic amongst the citizens and are mischievous and misleading,” it said in a post on X. On paper, petrol and diesel are deregulated fuels, but government often regulates their rates through its three oil marketing companies (OMCs) for economic and political reasons. State-run IOC, BPCL and HPCL enjoy near monopoly in domestic fuel retail with about 90% market-share. Giving daily update on fuel supply situation in the country amid ongoing West Asia crisis, petroleum ministry’s joint secretary Sujata Sharma said, as crude average oil price surged from about $70 a barrel in the previous year to about $113 per barrel in this month, OMCs are incurring under-recoveries of ₹20 a litre on petrol and ₹100 a litre on diesel, which fluctuate every day. To be sure, under-recoveries on petrol and diesel are not actual losses, but they are notional revenue loss as compared to their prevailing market prices of a particular day. In other words, if the government would have allowed companies to sell fuels at market-determined rates, petrol and diesel should be sold at ₹114.77 per litre, and ₹187.67 a litre in Delhi. State-run retailers are selling them at ₹94.77 per litre and ₹87.67 a litre respectively for last two year. Auto fuel rates have been more or less static since mid-March 2024 except for a marginal five-paise increase on October 30, 2024 on account of marketing cost adjustments. India imports 88% of crude oil it processes. In petroleum refining business about 90% costs pertains to crude oil. In order to partially compensate OMCs for their revenue losses and to protect customers from any hike in pump prices of auto fuels, the government slashed excise duty on petrol and diesel by ₹10 per litre each about a month ago. Simultaneously, it imposed levies on exports of diesel and aviation turbine fuel (ATF), in a measure to keep domestic fuel supplies from being diverted abroad.