The government is unlikely to raise the retail prices of petrol and diesel at least in January, though it intends to compensate oil marketing companies (OMCs) which are incurring losses on sale of diesel even as international crude oil prices fell by 40-45 per cent this month from the record highs in April 2022,
Sources said that a review of the OMC losses will be taken post the presentation of the Budget, on February 1.
When asked if retail prices of auto fuels will be raised, Oil Minister HS Puri on Thursday said the lament of OMCs is that throughout the period when oil prices were high they were selling (at lower prices) facing under recoveries on petrol and diesel. Some of them are saying that on diesel they are still having under recoveries.
“They are good corporate citizens and just now they are reeling from losses. If you have to sell energy, you have to buy it or produce it and if the global price is X then you add to it exchange rate, insurance, freight, refiner’s margin and dealer’s margin. You don’t determine that. So PSU OMCs are merely instruments. So I think they deserve some consideration, but what happens is not for me to guess,” Puri told reporters on the sidelines of the CII bio-energy summit here.
Last week, ICICI Securities said after the record high losses of ₹17.4 per litre on petrol and ₹27.7 on diesel for the week ended June 24, 2022, the margins for petrol are estimated at a positive ₹10 a litre for Q3 FY23 while diesel losses too have likely narrowed to ₹6.50 for the same quarter.
‘OMCs need support’
On compensating the OMCs, Puri said “They took a big hit on not raising fuel prices. So they came to us and said that we are good corporate citizens and so we need to be compensated. As a once time exception, of the ₹28,000 crore that was spent, we gave them ₹22,000 crore (on LPG). Now, they are telling us that we have taken a hit on petrol and diesel, and their H1 FY23 losses were something like ₹27,276 crore. It is under discussion and as a line minister I am supporting them as tomorrow they may face the situation again and if the guy goes into liquidation because you did not bail him out then next time he won’t be in a position to absorb.”