The three state-run fuel retailers, Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, are currently experiencing a combined recovery shortfall of around Rs 1,600 crore to Rs 1,700 crore per day, sources said, citing news agency PTI.The losses come despite a sharp rise in global crude oil prices, with retail petrol and diesel prices in India remaining unchanged at nearly two-year levels of Rs 94.77 per liter and Rs 87.67 per litre, respectively.
Domestic LPG prices rose by Rs 60 per cylinder in March, but are still below actual cost levels.
OMCs are under financial pressure
The losses stem from the gap between the actual cost of fuel and the retail price, known as the “recovery shortfall.”The sources said that oil and gas companies continued uninterrupted supplies of petrol, diesel and LPG despite the interruption in imports due to the conflict in the Middle East, which affected nearly 40 per cent of India’s crude oil imports, 90 per cent of its LPG imports, and 65 per cent of its natural gas imports.“Financially strong OMCs are critical to India’s energy security, continuity of supply, infrastructure expansion and economic stability,” a source told PTI.
The report said companies may now need higher working capital loans to continue operations if high crude oil prices persist for a longer period.“If high crude oil prices persist for an extended period, crude oil companies may need higher working capital borrowings and reprioritize some capital expenditure timelines,” a source said.
High fuel prices It may become inevitable
Sources quoted by PTI said that the decision to increase petrol and diesel prices has now become a political call for the government.A source said: “There is no doubt that rising fuel prices have become inevitable, but the timing and quantity of the increase must be decided by the government.”The Center has already reduced customs duties to absorb part of the burden. Excise duty on petrol was reduced to Rs 3 per liter from Rs 13, while excise duty on diesel was reduced to zero from Rs 10 per litre, taking the government’s monthly revenue to around Rs 14,000 crore.Despite mounting pressures, strategic investments are expected to continue to expand in refining, biofuels, ethanol blending and energy security infrastructure with government support.