New Delhi: Public sector oil marketing companies may not be able to sustain losses of Rs 1,000 crore per day from selling petrol and diesel below market prices, Petroleum Minister Hardeep Singh Puri said on Tuesday, a strong indication that petrol prices will rise in the coming days.“They are incurring losses to protect consumers. (But) at some stage the government will have to take action,” Puri told the Confederation of Indian Industry’s annual business summit, without making clear comments on the much-anticipated price hike.“How long can the oil companies sustain (the losses)? Frankly, that’s what worries me,” he said. The minister said petroleum retailers were facing financial pressure and expected a recovery shortfall of Rs 200 crore and a loss of Rs 100 crore in the April-June quarter, which could wipe out last year’s annual profits. The only way for the government to avoid taking “tough measures” is if the Strait of Hormuz reopens and the crude oil basket price falls to $70 per barrel.
Indian Fuel Corporation loses Rs 14 per liter of petrol
Since the war broke out on February 28, crude oil prices have soared nearly 50%, exceeding $100 a barrel. Puri refuted claims that the price hike was deliberately delayed due to assembly polls in Tamil Nadu, Kerala and West Bengal, saying several elections have been held since the last increase in fuel rates in 2022. “My point is not that oil prices… are not going up. I am saying there is nothing to do with it,” he said, adding that India was the only country to freeze fuel prices for four years.The current prices of petrol and diesel in the national capital are Rs 94.77 and Rs 87.67 per liter respectively. It is estimated that OMC— indian oil corp.Bharat Petroleum Corporation and Hindustan Petroleum Corporation – lost Rs 14 per liter on petrol, Rs 42 per liter on diesel and Rs 674 per domestic LPG cylinder. Their collective recovery shortfall is estimated to be Rs 1,600-1,700 crore per day. Allaying fears of shortages, Puri said there were no supply-related issues despite disruptions in energy flows and the country had 60 days of crude oil and LNG stocks and 45 days of LPG stocks. He acknowledged the need to increase reserves and said one of the companies was acquiring 400-500 acres of land for additional storage. Regarding domestic oil and gas exploration, Puri said the government has revised the exploration rules and expanded the area covered under licenses. The Center has also reduced effective royalty rates for crude oil and natural gas production to boost domestic exploration and production. According to the notice, the effective royalties for onshore crude oil production are reduced to 10%, and the royalties for offshore crude oil are reduced to 8%. Natural gas royalties were also cut to 8%.
