Shell India increased diesel prices by nearly Rs 20 per litre in less than a week's duration, however, the public sector fuel retailers maintained a pause on price hikes for a record 18th consecutive month.
Global crude oil prices remained near $90 per barrel and as such, Shell India, the local unit of the world’s second-largest oil and gas company, began hiking fuel prices by Rs 4 per litre every day, company dealers and industry sources revealed as reported by PTI. This surge in prices has now resulted in Shell selling diesel at Rs 130 per litre in Mumbai and Rs 129 per litre in Chennai.
Notably, the global company has 346 petrol pumps in India, mostly spread in the southern and western states of the country. Petrol prices at Shell have touched Rs 117-118 per litre. Meanwhile, petrol prices at public fuel retailers in Mumbai remained at Rs 106.31 per litre, and in Chennai touched Rs 102.63 per litre. Diesel prices at public sector companies’ pumps reached Rs 94.27 per litre in Mumbai and Rs 94.24 in Chennai. Shell doesn’t own an oil refinery, to convert crude oil into fuels like petrol and diesel, reported PTI.
The news agency reached out to the company’s spokesperson who said, “Shell India confirms price increase in diesel. We understand our customers' concerns; however, we have decided to increase the diesel prices due to the volatile market conditions. Our pricing depends on various factors, such as government taxes and duties, distribution costs, and operational expenses. We strive to give our customers the best value possible: providing high-quality fuels to help enhance engine performance and efficiency.”
State-owned fuel retailers dominate the industry in the country. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) together own 79,204 out of the total 87,677 petrol pumps in India. Amongst private retailers, Russia’s Rosneft-backed Nayara Energy dominates the field with 6,422 pumps, followed by Reliance-BP with 1,633 pumps. Shell operates 346 pumps. Notably, Nayara owns a 20 million tonnes a year refinery in Gujarat and has not made any major revisions to price so far. Reliance also owns refineries in Gujarat.
The report quoted sources who added that global oil prices moderated earlier this year in May and June, facilitating oil companies in achieving profits at the capped retail prices. However, global prices started inching up in July and since then, have contracted margins. The basket of crude oil that India purchases touched close to $75 per litre in May and June and increased to $80.37 in July and elevated further to $86.43 in August. The basket averaged $93.54 per barrel in September and the average for October is $92.72.
Brokerage firm Nomura pointed out that public sector retailers bore a loss of Rs 7 per litre on the current retail prices. The last few years witnessed volatile global oil prices as prices plunged into negative territory as the pandemic began around 2020 and increased to a 14-year high of about $140 per barrel in March 2022 after Russia invaded Ukraine.
The report noted that these surges left a significant impact on the Indian economy as the country is dependent on imports to fulfill 85 per cent of it’s fuel needs. IOC, BPCL, and HPCL temporarily halted daily price revision in late 2021 and the public fuel retailers have not updated fuel prices in line with the cost. After halting prices when fuel rates across the country touched an all-time high around November 2021, the companies continued the pause on prices as the Russia-Ukraine conflict led to a surge in global oil prices. As such, holding prices in the face of increasing costs resulted in the three firms reporting net earnings loss. Together, the companies posted a net loss of Rs 21,201.18 crore during the April-September period in 2022.
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