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The common man can expect a cut in petrol and diesel prices during the July-September or the October-December quarter in FY24 as softening international crude oil prices are aiding oil marketing companies (OMCs) in recouping losses incurred during FY23.
The Government is expected to take a decision on reducing retail prices of the two key auto fuels after reviewing earnings of the PSU OMCs in the April-June quarter in FY24.
Oil Minister HS Puri on Saturday said, “If you are asking my expectation on prices (petrol and diesel), I want them to come down if international crude prices remain stable and do not rise. In last quarter (Q4 FY23), our OMCs did okay, meaning they did not incur losses. I am not in a position to make an announcement, but I think if next quarter (Q1 FY24) goes well and the coming time is fine, they will be in a position to look at it (cutting prices).”
When prodded further, the Minister said, “Prices are determined in terms of some serious decision making. OMCs have recovered some of their losses. As we go along, we will see what can be done.”
In the red
The OMCs have been making losses on sale of petrol and diesel to the public due to unprecedented volatility in international crude oil prices following the Ukraine war in February 2022 and a freeze on the retail prices since April 6, 2022.
However, the government cumulatively cut the excise duty by ₹13 per litre and ₹16 on petrol and diesel, respectively, during November 2021 and May 2022, to tame inflation. Petrol costs ₹96.72 a litre in Delhi, while diesel is priced at ₹89.62.
The Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) cumulatively posted a loss of ₹18,622 crore during April-December of FY23.
Puri commended the OMCs for acting as “responsible corporate citizens” by shielding the common man from high prices of auto fuels.
For instance, while crude oil prices (Indian basket) in rupee per barrel terms rose by 23 per cent between December 2021 and March 2023, the increase in Retail Selling Price (RSP) of Petrol and Diesel at Delhi has only been 1.08 per cent and 3.40 per cent, respectively.
Poll-bound decision?
The timing of the expected cut in the oil prices coincides neatly with the crucial upcoming Assembly elections in Madhya Pradesh, Rajasthan and Chhattisgarh where the ruling BJP is directly pitted against the Congress. Elections are also scheduled in Telangana where the BJP has been trying to make a mark.
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