India break even on petrol but incurring loss on diesel, say oil companies
Petrol and diesel consumers in India have been relieved from daily price revisions on both fuel for the past few months. The oil companies in India have not increased the prices despite rates in international markets have gone up in recent times. As a result, the oil companies are incurring losses on diesel, the fuel used mostly in India for transportation and other purposes. The trio of Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited lost ₹18,480 crore in the June quarter on retail fuel.
The only silver lining for the oil companies is that they have broken even on petrol and cooking gas like LPG. A moderation in international oil prices has helped the fuel retailers to do so. Arun Kumar Singh, Chairman and Managing Director at BPCL, said, "It is our deep desire to absorb volatility. We don't pass on sharp increase or fall in prices." The trio had decided to absorb "some losses with hope that we can make up for these losses later," he said.
After the Centre decided to stall hikes in both petrol and diesel prices to give relief to consumers, hopes to recover costs faded. Petrol and diesel prices are still at an all-time high despite measures by the Centre and states to reduce tax. At one point, the fuel retailers were losing ₹20-25 per litre on diesel and ₹14-18 per litre of petrol. While they have been lucky to recover the cost of petrol and LPG, diesel remains in the red. "Next month onwards there will be no losses on LPG. We don't have any losses on gasoline (petrol) today," Singh said.
The three oil retailers usually revise the price of petrol and diesel daily. Since November 4, 2021, the rates were frozen for 137 days before states like Uttar Pradesh went to assembly polls. Price revision resumed from March 22 as the rates were increased by ₹10 per litre each within two weeks. However, according to BPCL, the increase was not enough to recover cost.
The oil companies stopped revising petrol and diesel rates to help the government manage inflation. This would have resulted in further hikes on petrol and diesel prices. "I believe this is a temporary phase. The world cannot afford this kind of prices for long," Singh said. Since April 7, rates have remained unchanged and has added to more losses.
In Delhi, a litre of petrol costs ₹96.72 a litre currently, while diesel costs ₹89.62 per litre. Before the Centre reduced excise duty, the rates were as high as ₹105.41 per litre for petrol and ₹96.67 a litre for diesel. According to oil companies, global oil prices need to fall drastically before any more price reduction can be expected in India.