Price of petrol and diesel may slash as general election nears. Here's why

As the general election approaches, it is likely that state-run oil companies may consider lowering petrol and diesel prices by around ₹5-10 next month, after releasing their third-quarter results. The previous price drop for both petrol and diesel occurred nearly two years ago, when the Central Exercise Policy was reduced by ₹8 and ₹6, respectively.

The public sector fuel retailers have frozen rates since April 2022, and authorities claim a comprehensive pricing review is imminent, with the companies potentially resting on margins of ₹10 per liter that can be passed on to customers. The move could assist in reducing inflation and become crucial ahead of the 2024 general elections.

It is projected that the state-run oil companies' net earnings will exceed a record ₹75,000 crore, even as their expenses of acquiring crude oil fall. The government is the promoter and largest shareholder in all three OMCs. So far, the aggregate net profit of the three enterprises in the first half of 2023-24 was ₹57,091.87 crore, a 4,917 per cent increase from ₹1,137.89 in the full fiscal year of 2022-23.

According to HT, the three OMCs (oil marketing firms) reported considerable net profits in Q1 and Q2 [of FY2023-24], and the trend is expected to continue in Q3. Following the results at the end of this month, they may consider lowering petrol and diesel prices by ₹5 to ₹10 per liter, providing some cushion for potential increases in international oil costs. The corporations will make a decision following conversations with its stakeholders.

Hindustan Petroleum Corporation Ltd (HPCL) has indicated that it will release its third-quarter results on January 27, while the other two businesses, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), are anticipated to do the same.