NEW DELHI: Petroleum minister Hardeep Singh Puri on Tuesday said public sector oil marketing companies may not be able to sustain daily losses of Rs 1,000 crore from selling petrol and diesel below market price, in a strong indication that pump prices are set to rise in the coming days.“They’re taking a loss to insulate the consumer. (But) at some stage govt would have to take a call,” Puri said at CII’s annual business summit, without clearly commenting on a much-anticipated price hike.“How long will the oil companies be able to take it (losses)? Frankly, that’s something that worries me,” he said. The minister said oil retailers were under financial strain and staring at under-recoveries of Rs 2 lakh crore and losses of Rs 1 lakh crore in the April-June quarter, which may wipe out last year’s annual profit. The only way govt may avoid taking “hard measures” is if the Strait of Hormuz reopens and the crude basket price falls to $70 a barrel.
Indian fuel cos losing Rs 14 per litre on petrol
Crude prices have surged nearly 50% since the war broke out on Feb 28, crossing $100 a barrel. Puri dismissed suggestions that price hike was intentionally postponed due to assembly polls in Tamil Nadu, Kerala and West Bengal, saying several elections have been held since 2022, when fuel rates were last increased. “It’s not my case that prices… not go up. I’m saying the two are unrelated,” he said, adding that India was the only country to keep fuel prices frozen for four years.Petrol and diesel are currently priced at Rs 94.77 and Rs 87.67 per litre, respectively, in the capital. According to estimates, OMCs – Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum – are losing Rs 14 per litre on petrol, Rs 42 per litre on diesel and Rs 674 per domestic LPG cylinder. Their collective under-recoveries are estimated at Rs 1,600-1,700 crore a day. Seeking to assuage fear of shortages, Puri said there were no supply-related issues despite disruptions in energy flows and that the country had 60 days of crude and LNG inventories and 45 days of LPG stocks. He acknowledged the need to increase reserves and said one of the companies was acquiring 400-500 acres for additional storage. On domestic oil and gas exploration, Puri said govt has amended exploration rules and expanded the acreage offered under licensing rounds. The Centre has also reduced effective royalty rates on crude oil and natural gas production to boost domestic exploration and output. According to the notification, effective royalty on onshore crude oil production has been reduced to 10%, while offshore crude royalty has been lowered to 8%. Royalty on natural gas has also been cut to 8%.
