New Delhi: Public sector oil marketing companies (OMCs) Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd are losing about ₹30,000 crore a month on the sale of petrol, diesel and cooking gas, as they continue to retail fuels at lower rates despite a rise in crude oil prices due to the war in West Asia.
Speaking to reporters on the domestic fuel stock situation amid the West Asia crisis, Sujata Sharma, joint secretary in the Union ministry of petroleum and natural gas, said OMCs are also losing revenue or incurring under-recoveries on sale of aviation turbine fuel, or jet fuel, for domestic flights. She, however, added that the estimated losses on jet fuel sales are not immediately available.
Sharma’s comments come at a time when expectations of a fuel price hike are gaining momentum.
“Our oil marketing companies are procuring expensive crude oil and gas, but to protect our consumers, they are selling at low prices. This impacts their finances, and to curb this impact, the government of India has cut excise duties, because of which a burden of ₹14,000 crore is on the government of India. In spite of this, oil marketing companies are facing under-recoveries, be it on the sale of petrol, diesel or LPG,” she said on Friday in the national capital.
The pump price of petrol is currently at ₹94.77 per litre in Delhi, while diesel is being retailed at at ₹87.67 per litre. A 14.2-kg domestic cooking gas cylinder is priced at ₹913 in the national capital. The government last revised retail prices of petrol and diesel in 2024, cutting them by ₹2 a litre ahead of the national elections. Prices have remained unchanged since.
“The cumulative under-recovery of petrol, diesel and LPG (liquefied petroleum gas) is around ₹30,000 crore in a month,” Sharma added.
According to the government, the under-recovery, or loss, on petrol sales stands at around ₹20 per litre, while that on diesel is about ₹100 a litre.
Further, domestic LPG prices were kept unchanged during the latest round of price revision on 1 May, while commercial LPG prices were increased by nearly ₹1,000 per cylinder. Prices of domestic LPG were last raised by ₹60 per cylinder in March.
Although prices of regular petrol and diesel have not been increased so far, there is growing anticipation of a hike in the coming days.
In its monthly economic review for April, the department of economic affairs under the finance ministry noted that although some economies, such as India, have not passed on the impact of higher crude prices to consumers, such a move is “inevitable”.
“Some countries have begun to allow prices to be passed on to end-users—households and businesses. Some are yet to do so. But it is inevitable. During a period of supply disruption, demand has to moderate; failing that, countries will have to pay a much higher price for energy supplies,” it said.
Amid the continuing blockade of the Strait of Hormuz, crude prices surged to a four-year high of $126 on 30 April. The July Brent contract on the Intercontinental Exchange was trading at $101.06, up 1% from its previous close, while the June contract of West Texas Intermediate on the New York Mercantile Exchange (NYMEX) was at $94.89 a barrel, up 0.08%.
Global oil prices traded higher on Friday after US and Iranian forces exchanged fire at the Strait of Hormuz on Thursday, the first such flare-up since the ceasefire announcement on 7 April.