Oil Companies Losing Nearly Rs 3 Per Litre On Diesel, Petrol Profit Down Too: Report

Global oil prices serve as the benchmark for domestic rates in India due to the country's reliance on imports to fulfil 85 per cent of its oil requirements

They have declined requests to return to daily price adjustments and transfer the decline in rates to consumers, citing the extreme volatility of prices, which fluctuate from one day to the next

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That state-owned fuel retailers are currently experiencing losses of nearly Rs 3 per litre on diesel sales revealed Industry officials. At the same time, the profit margin on petrol has diminished due to the recent increase in international oil prices. These factors have contributed to the decision to maintain retail prices at their current levels, reported the news agency PTI.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), which collectively dominate around 90 per cent of India's fuel market, have chosen not to adjust the prices of petrol, diesel, and cooking gas (LPG) for nearly two years. This decision, described as "voluntary," has led to financial losses during periods of higher input costs and increased profits when raw material prices were lower.

Global oil prices, which serve as the benchmark for domestic rates in India due to the country's reliance on imports to fulfil 85 per cent of its oil requirements, experienced a decline towards the end of last year. However, they strengthened once more in the latter half of January.

They have declined requests to return to daily price adjustments and transfer the decline in rates to consumers, citing the extreme volatility of prices, which fluctuate from one day to the next. Additionally, they argue that their previous losses have yet to be completely recovered.

"There are losses on diesel," an industry official told the news agency PTI. "It had turned positive, but now oil companies are losing close to Rs 3 per litre." He added that the profit margin on petrol has reduced from the low teens to approximately Rs 3-4 per litre.

In response to inquiries regarding fuel price adjustments, Oil Minister Hardeep Singh Puri informed reporters during the India Energy Week that the government does not dictate prices. He explained that oil companies autonomously make pricing decisions, considering various economic factors.

"They say there is still volatility (in the market)," Puri said.