Oil companies losing Rs 3 a litre on diesel, petrol profits also down: Report

Government-owned fuel retail companies have been experiencing a loss of nearly Rs 3 per litre on diesel sales, whereas the revenue stream from petrol has significantly decreased as a consequence of a recent surge in global oil prices. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), who control roughly 90 per cent of India's fuel market, 'voluntarily' have not changed petrol, diesel and cooking gas (LPG) prices for almost two years now, resulting in losses when input cost was higher and profits when raw material prices were lower.

Fuel rates have been steady after Union Finance Minister Nirmala Sitharaman reduced the excise duty on petrol by Rs 8 per litre and Rs 6 per litre on diesel in April 2022.

International oil prices had softened late last year but firmed up again in the second half of January.

The companies have resisted calls to revert to daily price revision and pass on softening in rates to consumers on grounds that prices continue to be extremely volatile - rising on one day and falling on the other - and that their past losses haven't been fully recouped.

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

The fuel price freeze that began on April 6, 2022, had a loss as high as Rs 17.4 a litre on petrol and Rs 27.7 per litre on diesel for the week ended June 24, 2022. However, subsequent softening led to losses being eliminated. The three firms had a margin of Rs 11 a litre on petrol and Rs 6 on diesel last month.

The three fuel retailers froze petrol and diesel prices for the longest duration in the last two decades. They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.

The freeze continued into 2022 but the war-led spike in international oil prices prompted a Rs 10 a litre hike in petrol and diesel prices from mid-March 2022 before another round of excise duty cut rolled back all of the Rs 13 a litre and Rs 16 a litre increase in taxes on petrol and diesel done during the pandemic.

That followed the current price freeze that began on April 6, 2022 and still continues.

Earlier it was reported that Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) may slash petrol and diesel prices in February ahead of the Lok Sabha elections.

All the oil companies have reported a major surge in profits in the December quarter. The combined net profit of IOC, BPCL and HPCL in the April-December (first nine months of current fiscal year) was better than their annual earning of Rs 39,356 crore in pre-oil crisis year, regulatory filings showed.

Hindustan Petroleum Corporation (HPCL) reported a 61 per cent y-o-y growth in its consolidated net profit at Rs 743 crore during Q3 FY24, aided by better sales and marketing margins. Indian Oil Corporation Limited (IOCL) reported consolidated net profit of Rs 9,224.85 crore for the third quarter of financial year 2023-24, a multi-fold increase from Rs 890.28 crore reported last year.

Bharat Petroleum Corporation Ltd (BPCL) posted an 82.11 per cent year-on-year (YoY) rise in its consolidated net profit during the third-quarter of the ongoing financial year (Q3 FY24). The company's profit came at Rs 3,181.42 crore in Q3 as against Rs 1,747.01 crore in the same period last fiscal.

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