Fuel retailers lose Rs20/litre on petrol, Rs100 on diesel as Iran war drags on| Indian news

New Delhi: Fuel retailers lose out ₹20 per liter on petrol and ₹100 per liter on diesel as state-owned firms continue to protect consumers from oil price volatility by holding pump rates, an oil ministry official said on Thursday.

Sector experts and industry executives, speaking on condition of anonymity, said such volatility could be unsustainable for oil refineries if the West Asia crisis extended and international oil prices remain above $70-80 per barrel.

They expect oil companies to partially pass on their revenue losses on petrol and diesel to consumers sometime after the assembly elections – the last round of voting in the ongoing state polls is on April 29 – if international oil price volatility continues. Benchmark crude Brent, which was at $72.87 a barrel before the war broke out in West Asia, emerged up nearly 40% to $101.91 a barrel on Wednesday. It hovered above $103 on Thursday.

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Refutation of a news report published on social media that petrol and diesel rates may be increased ₹25-28 a liter after the election of the assembly, the petroleum ministry said: “It is hereby made clear that no such proposal is being considered by the government.” “Such news items are designed to create fear and panic among the citizens and are mischievous and misleading,” it said in a post on X.

On paper, petrol and diesel are deregulated fuels, but the government often regulates their rates through its three oil marketing companies (OMCs) for economic and political reasons. State-owned IOC, BPCL and HPCL enjoy near monopoly in domestic fuel retailing with around 90% market share.

Giving a daily update on the fuel stock situation in the country amid the ongoing West Asia crisis, Petroleum Ministry Joint Secretary Sujata Sharma said as the average crude oil price has risen from around $70 per barrel in the previous year to around $113 per barrel this month, OMCs under-recovery of ₹20 a liter on petrol and ₹100 per liter on diesel, which varies every day.

To be sure, under-recoveries on petrol and diesel are not real losses, but they are notional loss of revenue compared to their prevailing market prices of a particular day. In other words, if the government had allowed companies to sell fuel at market-determined rates, petrol and diesel must be sold at ₹114.77 per litre, and ₹187.67 per liter in Delhi.

State-owned retailers sell them at ₹94.77 per liter and ₹87.67 a liter respectively for the last two years. Auto fuel rates have been more or less static since mid-March 2024, barring a marginal five-paise hike on October 30, 2024 due to marketing cost adjustments. India imports 88% of crude oil it processes. In petroleum refining business about 90% costs relate to crude oil.

In order to partially compensate OMCs for their revenue losses and to protect customers from any increase in pump prices of motor fuels, the government has reduced excise duties on petrol and diesel by ₹10 per liter each about a month ago.

At the same time, it imposed levies on the export of diesel and aviation turbine fuel (ATF) in a measure to prevent domestic fuel supplies from being diverted abroad.