Oil Companies Face Daily Loss of ₹1,700 Crore: Costs Rise, Yet Petrol and Diesel Prices Remain Unchanged.
Petroleum Companies' Losses: Despite the surge in crude oil prices driven by the crisis in the Middle East, petrol and diesel prices in India have remained stable. Consequently, state-run oil companies are incurring a daily loss of ₹1,700 crore—a cumulative figure that has surpassed ₹1 lakh crore over the last 10 weeks.
Petroleum Companies' Losses: India's state-owned oil companies—Indian Oil (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL)—are currently under immense financial strain. While crude oil prices in the international market have surged by nearly 50% in recent times, the prices of petrol, diesel, and Liquefied Petroleum Gas (LPG) in India continue to hover at their previous levels.
The Math Behind the Heavy Losses (Under-recovery)
Daily Deficit: The companies are selling fuel at prices lower than their actual costs, resulting in a daily loss of ₹1,600 to ₹1,700 crore.
Total Cumulative Loss: Over the past 10 weeks, this deficit has exceeded ₹1 lakh crore.
Pricing Status: In Delhi, petrol prices remain steady at ₹94.77 per liter, while diesel stands at ₹87.67 per liter. Although the price of an LPG cylinder was hiked by ₹60 in March, it is still being sold at a price below its actual cost.
Threat to Investments and Projects
These persistent losses could have repercussions on the companies' future plans and initiatives.
Working Capital: The companies are now compelled to mobilize larger sums of capital to procure crude oil.
Project Delays: If crude oil prices remain elevated, investments in new projects—such as refineries, pipelines, and clean fuel initiatives—could face cutbacks or delays.
The Government's Move
To alleviate the burden on the general public, the Government of India has implemented a substantial reduction in the excise duty levied on petrol and diesel. The duty on petrol has been slashed from ₹13 to ₹3, while the duty on diesel has been reduced from ₹10 to zero. As a result of this reduction, the government is incurring a monthly revenue loss of approximately ₹14,000 crore.
While nations such as Japan and the UK have hiked fuel prices by up to 30%, the Indian government has managed to keep prices in check. However, sources suggest that raising fuel prices is now becoming "inevitable," although the final decision rests entirely with the government.