Oil companies making ₹10 per litre profit on petrol. Why it's still costly
- Oil companies in India are making ₹10 a litre profit on petrol, while on diesel they are losing ₹6.5 per litre.
Despite being static for more than seven months, petrol and diesel retail prices in India are still at sky-high levels. In the meantime, PTI reports that the oil marketing companies in India are selling petrol at a profit of ₹10 per litre. But, that is not impacting the retail prices of the motor fuel and not relieving the customers. The report claims that despite making a ₹10 per litre profit on petrol, the oil marketing companies are losing ₹6.5 per litre on diesel. The OMCs are trying to offset this with the profit they are making on petrol. Hence, any reduction in fuel prices in the coming days is unlikely.
The report claims that state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd. (HPCL) haven't revised petrol and diesel prices for the past 15 months. They had reportedly faced losses when the price was higher and now making that up.
The report further states that during the third quarter of the current financial year, between October and December last year, oil marketing companies registered a profit margin of ₹10 per litre on petrol. However, this came after the OMCs recorded high losses of ₹17.4 per litre on petrol and 27.7 a litre on diesel in June last year.
In the international market, fuel prices remained turbulent in the last couple of years. India imports over 80 per cent of its crude oil requirement from the international market. Hence, the ups and downs of the fuel price in the international market impacted dearly on the Indian OMCs as well. The last price revision from the state-owned oil marketing companies came in April last year.
The OMCs stopped the daily price revision in early November 2021, when rates across India hit an all-time high, prompting the government to roll back a part of the excise duty hike it enforced during the pandemic to take advantage of low oil prices in the international market. This freeze continued into 2022, but the war between Russia and Ukraine resulted in an international oil price hike, leading to a ₹10 per litre hike in petrol and diesel prices in mid-March last year.